Will next generation ACOs save Medicare money?
Mar 03, 2022 · The Next Generation ACO (NGACO) program, which includes fewer entities and requires taking on much larger financial risk, appeared to stumble in its ability to save Medicare money. An independent evaluation of the 50 NGACOs found that with bonus payments included, the program increased Medicare spending over its first two years by $93 million. That was a …
How do ACOs reduce health care costs?
Aug 22, 2019 · Comparing Spending on Medicare Advantage vs. Accountable Care Organizations (ACOs) August 22, 2019 A new entry in the Health Affairs Blog, “Evaluating Medicare Programs Against Saving Taxpayer Dollars,” compares Medicare’s two payment programs that are paving the way to “value-based” care: the Medicare Shared Savings Program (MSSP ...
Are ACOs becoming more accountable?
Aug 21, 2019 · August 21, 2019 - The Medicare Shared Savings Program, which governs the majority of Medicare accountable care organizations (ACOs), and Medicare Advantage are gaining in popularity. But the former is saving taxpayers, while the latter is incurring costs, a new report in Health Affairs finds. “Our examination of the literature indicates that Medicare …
How can ACOs grow market share?
Nov 02, 2014 · More effective would be to simply make the existing traditional Medicare payment system even worse by creating two scales: an abysmally low payment rate for regular Medicare, and a much higher rate for ACO participants so they actually have a shot at outrunning that bear doing better than the alternative.
What could cause an ACO to not meet expenditure benchmarks?
After studying the conceptual and operational issues, it is concluded herein that ACOs are in the long-haul doomed for failure since: 1) most hospitals and physicians have major difficulties in consummating tightly coordinated collaborative efforts; 2) providers historically have had a dismal track record in reducing ...
What are the challenges with ACOs?
Robert Pearl, M.D., described the four major challenges facing ACOs: (1) Perverse Payment Model; (2) Wrong-Sized Medical Staff; (3) Technology Platform Incompatibility; and (4) Lack of Physician Leadership and Management Structure.
Is ACO an effective method to save money for Medicare?
When an ACO succeeds both in delivering high-quality care and spending health care dollars more wisely, the ACO may be eligible to share in the savings it achieves for the Medicare program. In certain instances, an ACO may owe a portion of losses if it increases costs or does not meet certain quality metrics.Aug 25, 2021
What type of impact might ACOs have on care providers?
As a result, patients in ACOs may experience increased focus on preventive care early and often. Additionally, by holding providers accountable for the safety, quality and appropriateness of the care they provide, ACOs are designed to help patients avoid unnecessary or duplicative tests and procedures.
Why is creating a successful ACO difficult?
That's because moving from fragmented, fee-for-service, paper-based health care is difficult. Care providers in ACOs face four main obstacles. Each obstacle is tricky yet possible to overcome. The prevailing fee-for-service payment model rewards volume of services, not superior clinical outcomes.Aug 14, 2014
Which problems would accountable care organizations ACO solve?
Background. Accountable care organizations (ACOs) have been created to improve patient care, enhance population health, and reduce costs. Medicare in particular has focused on ACOs as a primary device to improve quality and reduce costs.Feb 5, 2016
What are the disadvantages of an ACO?
Cons. Limited choice: With so many healthcare providers joining ACOs, some patients will have trouble finding doctors outside of a specific group. The shortage of options could lead to higher patient costs. Referral restrictions: ACOs provide doctors incentives to refer to specialists within the group.
Are accountable care organizations saving money?
Accountable care organizations saved Medicare $4.1 billion in 2020 and nearly $2 billion after taking out shared savings, according to new federal data.
Are ACOs effective?
Reviewing the first three years of the Shared Savings Program, the study found that the 428 participating ACOs improved performance on 82 percent of individual quality measures while serving 9.7 million beneficiaries. The ACOs also outperformed fee-for-service providers on 81 percent of the quality measures.
How do ACOs impact the health of a population?
ACOs focus on improving individual health and also improving the health of the entire population for which they are accountable. This is known as population health management. 4 ACOs improve population health by focusing on prevention and carefully managing patients with chronic diseases.
What are the four major categories for pursuing ACOs?
ACOs in the first year of performance contracts are commonly focusing on four areas: first, transforming primary care through increased access and team-based care; second, reducing avoidable emergency department use; third, strengthening practice-based care management; and fourth, developing new boundary spanner roles ...Dec 6, 2018
How do ACOs differ from the health maintenance organizations HMOs of earlier years?
[11] A primary structural and conceptual difference between HMOs and ACOs is that HMOs are insurance groups that contract with clinicians, while ACOs consist of clinician groups that contract with insurers.Mar 11, 2021
How many people are covered by Medicare Advantage?
The plans covered 19.8 million individuals in 2018, up 57 percent compared to 2012.
Is Medicare Advantage a shared savings program?
August 21, 2019 - The Medicare Shared Savings Program, which governs the majority of Medicare accountable care organizations (ACOs), and Medicare Advantage are gaining in popularity. But the former is saving taxpayers, while the latter is incurring costs, a new report in Health Affairs finds.
How are commercial ACOs structured?
First, commercial ACOs are structured differently from noncommercial ACOs in terms of patient numbers, location, level of hospital integration, breadth of specialty services provided in house, provider-to-patient ratios, and benchmark spending. From a resource dependency perspective, these factors are seen as critical drivers of organizational sustainability. The substantially lower benchmark spending and higher efficiency index of commercial ACOs suggests that they are considerably “leaner” organizations when entering Medicare ACO programs, compared to noncommercial ACOs, and that they may have already implemented efficiency processes. 19 This may also explain why the magnitude of savings is generally greater for noncommercial ACOs during their initial Medicare performance years. 20
What are accountable care organizations?
Accountable care organizations (ACOs) have diverse contracting arrangements and have displayed wide variation in their performance. Using data from national surveys of 399 ACOs, we examined differences between the 228 commercial ACOs (those with commercial payer contracts) and the 171 noncommercial ACOs (those with only public contracts, such as with Medicare or Medicaid). Commercial ACOs were significantly larger and more integrated with hospitals, and had lower benchmark expenditures and higher quality scores, compared to noncommercial ACOs. Among all of the ACOs, there was low uptake of quality and efficiency activities. However, commercial ACOs reported more use of disease monitoring tools, patient satisfaction data, and quality improvement methods than did noncommercial ACOs. Few ACOs reported having high-level performance monitoring capabilities. About two-thirds of the ACOs had established processes for distributing any savings accrued, and these ACOs allocated approximately the same amount of savings to the ACOs themselves, participating member organizations, and physicians. Our findings demonstrate that ACO delivery systems remain at a nascent stage. Structural differences between commercial and noncommercial ACOs are important factors to consider as public policy efforts continue to evolve.
What is the National Survey of Accountable Care Organizations?
The National Survey of Accountable Care Organizations is an online survey that examines factors that influence the formation, implementation, and performance of ACOs. 13 Three cross-sectional waves of the survey have been conducted to date. Each wave includes a new cohort of ACOs that have not previously participated. Wave 1 was conducted between October 2012 and May 2013 and had 175 respondents. Wave 2 was conducted between September 2013 and March 2014 and had 96 respondents. Wave 3 was conducted between November 2014 and April 2015 and had 128 respondents. Questions added in waves 2 and 3 were asked in a follow-up survey conducted between November 2014 and April 2015 with 82 of the original wave 1 respondents. The overall response rate across all three waves was 64 percent. Further details about the survey methodology have been published previously 13 and are available in the online Appendix. 14
Do ACOs have the capacity to use EHR?
Fourth, despite intensive policy efforts to improve information management systems, ACOs still have limited capacity to make optimal use of these systems. Although EHR adoption, the use of decision support and data analytics, and sharing of information between providers are all considered essential building blocks to delivery system reform, only a minority of ACOs (both commercial and noncommercial) said that they had a high level of capability in these areas. 27 The immature stage of development of information technology in ACOs could limit delivery system transformation. This raises concerns that ACOs lack some of the essential tools needed to become high-reliability organizations.
Do ACOs provide incentives?
Second, in terms of provider compensation, the majority of ACOs now provide some financial incentives to physicians to lower costs and raise quality, and there appears to be a higher degree of change in physician compensation models in commercial ACOs than in noncommercial ACOs. This finding contrasts with the results of a study from the early 2000s that found that only 25 percent of California physician organizations were offering financial incentives to physicians based on reduced spending for hospital services and referrals. 22 However, the question remains whether such incentives are sufficient or even necessary to influence cost and quality outcomes. Andrew Ryan and coauthors found that although practices participating in an ACO provide higher compensation for better performance on quality metrics, the proportion of that funding was less than 5 percent of overall compensation, and salary and compensation for productivity measures remain dominant. 23
When was Medicare data examined?
1, 2009, and Dec. 31, 2014, to look at post-acute care spending in the Medicare Shared Savings Program (MSSP). The researchers calculated differences in post-acute care spending for hospital admissions and skilled nursing facility stays by comparing beneficiaries served by ACOs with beneficiaries who saw local non-ACO health care professionals. The estimates were made for ACO cohorts entering the MSSP in 2012, 2013, and 2014.
How much money did Oregon receive from the federal government?
Oregon received about $1.92 billion in federal funding to help implement the program. Alternative payment model participation soars. Here's how to think about it. Colorado's Medicaid ACO model "was more limited in scope and implemented without substantial federal investments," according to the researchers.
Why are ACOs important?
Because ACOs are designed to reduce utilization, the bonus—or share of estimated savings received by an ACO—is one factor that significantly influences ACO profitability and has garnered the greatest attention both in academic research and in private sector negotiations and deliberations over ACO participation. Bonus payments made to ACOs are themselves based on several key design elements:
What is an ACO in healthcare?
The alternative payment model that has gained broadest adoption over the past ten years is the accountable care organization (ACO), in which physicians and/or hospitals assume responsibility for the total cost of care for a population of patients.
What are trend factors?
Trend factors may be based on national projections, more market-specific projections, or even ACO-specific projections. For these and other reasons, a pre-determined benchmark may not be a good estimate of what total cost of care would have been in the absence of the ACO.
Who is Rachel Groh?
Rachel Groh is a consultant in the Boston office. David Nuzum is a senior partner in the New York office. Michael Chernew is a professor at Harvard Medical School, and is currently serving as the Chair of Medicare Payment Advisory Commission (MedPAC).
ACOs Are More Likely Than FFS to Promote Efficiency
- FFS Payment Does Not Encourage Efficient Care Delivery
It is widely acknowledged that there is a lot of waste and provision of low-value care in the FFS system, which can harm patients clinically and financially. This is apparent from the decades of research on geographic variation in utilization and in initiatives such as the American Board of In… - ACOs Can Promote Efficiency Without Undercutting Quality
ACO models were born, in part, out of recognition in the ACA that FFS did not encourage efficient delivery of care. By providing bonuses for lower total cost of care (and sometimes penalties for higher total cost of care), ACOs promote reduction of waste. Moreover, a population-based pay…
ACOs Are More Likely Than FFS to Promote Equity
- FFS Does Not Support Equity
Disparities in health care are well known. As with low-value care, FFS is not the sole cause of disparities and moving away from FFS will not eliminate them. That said, FFS is not well-suited to address disparities because it directs resources away from populations that have limited acces… - ACOs Can Promote Equity
The population perspective of ACOs is better suited to reduce disparities. Specifically, in contrast to FFS, population-based payments can be more easily adjusted to ensure adequate resources are devoted to populations who are otherwise underserved. Whereas FFS allocates payment accordi…
Misperceptions and Challenges Related to Population-Based Payment Models
- Moving forward, policy must address misperception and challenges faced by the population-based models. Specifically, several points must be emphasized:
Summing Up
- The American health care system is expensive, characterized by meaningful waste and disparities. The dominant FFS system is an impediment to addressing these issues. Moreover, unless more money is infused into the system, it is likely that fees for professionals and facilities will grow at rates below inflation and input costs. Population-based payment models offer provi…