This document is a collection of annual high level data that illustrate facts about Medicare Shared Savings Program ACOs such as, where ACOs are located, as well as ACO composition, payment characteristics, beneficiary population demographics, and the risk profile of the ACO beneficiary population. This compilation of information provides an aggregate look at the composition of all ACOs, not specific ACOs.
Three things to notice in this article: One is a simplified explanation of the law and practical consequences. Another is the choice of which model to adopt: shared savings or pioneer. It includes a status-update of an ACO that chose the pioneer model for Medicare patients.
My friend Mark Weiss at the Advisory Law Group (http://advisorylawgroup.com/home.html) posted a great blog article on the possible impact of ACO's on physician medical practices. It's a perfect follow up to my blog post last week about ACO's continuing to contract with commercial payers. With permission, here is Mark's post:
Lost In Translation: Why Sell The Cow When You Can Give Away The Milk?
Chances are you're familiar with the expression, "why buy the cow when you can get the milk for free?"
Unfortunately, for many physicians and medical groups, it's as if something were lost in translation, as if the aphorism were instead, "why sell the cow when you can give away the milk?"
Consider, for example, a medical group whose physicians practice exclusively at one hospital, let's call it Community Memorial St. Mark's Hospital. Up until now, they've been billing and collecting, and contracting with third-party payers, completely separately from the hospital.
Now, along comes Community Memorial which induces the group to participate in its Accountable Care Organization. Although initially focused on Medicare payments, the provisions of the ACO documents are broad enough to enable the ACO to serve as the funnel through which all types of third-party payer reimbursement will eventually flow. Those in control of the ACO, that is, Community Memorial, now have discretion as to amount of dollars that will flow back to our prototypical medical group.
Taking into account the fact that not too many patients actually come into the office with open check books or sacks of cash, the medical group has effectively transferred the destiny of its cash flow to the hospital controlled ACO. What value, then, is left in its practice?
If you owned Community Memorial wouldn't you like to get the medical group's cash flow without having to purchase the medical group's practice: why buy the cow when you can get the milk for free?
As if to add insult to injury, the owners of the cow no longer have the milk but they still have the obligation to feed the cow: they are stuck with the overhead of running their group.
Although similar situations arise in the context of other physician transactions, from exclusive contracts to employment agreements, the ACO situation threatens to become the most egregious example of this milking.
The situation will only increase in scope and intensity, as pressure from hospitals to align physicians through ACO structures will grow as Obamacare clicks completely into gear.
Physicians still have time to exert some level of control over how ACOs will function. Even if you believe your facility is years away from considering an ACO, it's time now to begin working to protect your interests.
And, once ACO formation is a certainty for your group, you need to approach contracting with your eyes wide open to its economic realities.
Consider that for some groups, the fear of being left out in the cold - not included in an ACO's network - may be overblown when the alternative is the loss of the financial engine which is your practice's business, all the while being left with the obligations of your practice's overhead.
Here are two new examples of ACO's contracting with commercial payers. This is a trend that is definitely going to continue. However, I haven't seen hardly any impact yet on physician finances but this is something we all will need to keep an eye on. If you have seen or heard of direct impact of ACO commercial contracting on physician reimbursement and/or finances, please drop me a line and let me know.
Here in my backyard, Houston's largest health care provider, Memorial Hermann Health System, has partnered with Aetna to form an accountable care organization. Click here for the full article:
Also in Texas, Texas Health Resources located in the Dallas-Ft. Worth Texas area, has also partnered with Aetna to form a new ACO:
So you want to form an ACO? Get ready to put in some serious capital. The data requirements for launching an accountable care organization will cost smaller ACOs more than $1 million and large ones up to $4 million before they start operations, according to a Black Book survey that included 300 developing and established ACOs. The survey also reveals that 39% of ACO respondents plan to make most or all of their technology purchasing decisions before the third quarter of 2013.
Twenty-eight percent of providers participating in ACOs say they already have their basic health information exchange (HIE) and interoperability strategies in place. These providers will focus on community or regional exchanges for the foreseeable future, rather than national HIE initiatives, according to the report.
For more information on IT and other ACO start up costs, follow this link:
http://www.prweb.com/releases/prweb2012/9/prweb9908320.htm
Here's some proof from CIGNA I read yesterday:
Cigna partners with Houston doctors for collaborative accountable care
"Cigna has partnered with doctors affiliated with St. Luke’s Health System Clinically Integrated Providers and Renaissance Physicians Organization on collaborative accountable care initiatives. The goals of the program are the same as those of an accountable care organization, the Connecticut-based insurer said in a Wednesday statement. They focus on expanding patient access to health care, improve care coordination, improving health outcomes, lowering total medical costs and increasing patient satisfaction. They build on Cigna’s push to move the health care delivery system to an outcomes-based system."
Cigna Launches New ACO With Denver Physician Group
"Cigna and New West Physicians P.C., a Denver-based physicians group, have launched a collaborative accountable care initiative, Cigna's version of an accountable care organization. The collaborative will benefit nearly 7,800 people covered by a Cigna health plan who receive care from the 60 primary physicians and 20 mid-level providers with New West Physicians. The group has 16 locations through the Denver metro area."
Will the ACO concept move in to the private payer arena? Seems likely. Many private insurance companies are embracing the same concepts that underscore the Medicare ACO initiatives and in so doing, are encouraging their participating providers to join them in adopting new payment methodologies that will reduce costs while improving quality of care. For example, UnitedHealthcare, one of the nation's largest managed care organizations, has posted the following statement on its website:
"UnitedHealthcare is evaluating a variety of value-based contracting strategies to increase quality, reduce medical costs, improve patient outcomes and share risk as well as responsibility for controlling medical cost trend.
UnitedHealthcare considers Accountable Care Organizations (ACOs) to be an important element of its value-based contracting strategy. The goal of value-based contracting is to move the delivery system toward increased collaboration between the health care community and greater emphasis on shared risk accountability for improved outcomes. The transformation of industry-wide payment models is evolving and will require a variety of strategies to suit the needs and diversity of consumers and health care providers in individual communities across the country. UnitedHealthcare is currently pursuing a variety of value-based contracting models from performance based contracting incentives to full capitation."
As a private physician practice, this is a continuing trend you need to stay on top of. If the trend does continue, you can bet it has the potential to impact the econcomics of your medical practice.
UPDATE: After I wrote this blog post, CIGNA announced new ACO agreements with providers.
The number of accountable care organizations (ACOs) has increased by 38 percent in the past six months, with 221 models identified in 45 states, according to a study by Leavitt Partners. http://leavittpartners.com/wp-content/uploads/2012/06/Growth-and-Dispersion-of-ACOs-June-2012-Update.pdf
Out of the 221 ACOs, 148 are single-provider ACOs, 67 percent, followed by 43 multiple-provider ACOs, 19 percent, according to the report. The other models included 17 insurer ACOs and 13 insurer-provider ACOs.
The number of hospital-sponsored ACOs has continued to increase, from 99 in late 2011 to 118, while ACOs sponsored by physician groups has almost doubled, from 38 to 70, the report found.
The week, 89 new ACOs were announced:
CMS's 27 Shared Savings Program ACOs, which began on April 1, will serve an estimated 375,000 beneficiaries in 18 states. The group has collectively more than 10,000 physicians, 10 hospitals and 13 physician-driven organizations.
21 of the 27 ACOs are physician-run. The American Medical Association also noted that five of the approved groups will participate under an advance payment model, which provides up-front funding from Medicare to cover the costs of establishing the infrastructure needed to coordinate patient care. Only two of the 27 approved ACOs agreed to be held accountable for a share of any losses if Medicare costs for the patients receiving coordinated care exceed projections. The rest of the groups will not be exposed to possible penalties, but they will be eligible for a lower share of potential savings compared with the two ACOs exposed to risk.
Under the current model, which is different from the true capitation model, it will be interesting to see if savings can really be achieved. I'm personally skeptical. We'll just have to wait and see on this one.
For details about the 27 ACOs, check out this link
http://www.vcpi.com/Portals/96686/docs/ACO%20-%20selected%20for%20start%20up%204-1-12.pdf
