Accountable Care Organization

Definition

A voluntary organization consisting of doctors, hospitals and other health care providers, formed with the goal of improving the quality of care for Medicare patients. Through cooperation and coordination of care the goal is to reduce duplication of medical services and prevent medical errors. The idea for an Accountable Care Organization is to replicate the shared accountability for patient health care that a Health Maintenance Organization (HMO) provides while maintaining open access for patients(1). These organizations are designed to be 'virtual' organizations of physicians in association with acute care hospitals. There are three essential characteristics of Accountable Care Organizations: 1) provide and manage with patients the entirety of their care over various settings, including ambulatory and inpatient, 2) prospectively planning budgets and resource needs and 3) be of sufficient size to provide comprehensive, valid and reliable performance measurement(2).

Creation

Section 3022 of the Affordable Care Act amended Title XVIII of the Social Security Act by adding a new section 1899(3). This section requires the creation of a Medicare Shared Savings Program designed to encourage Accountable Care Organization (ACO) development. This section enacts provisions to provide Medicare payments to providers of services or supplies who participate in ACOs. The creation of the Shared Savings Program is geared towards developing better care for individuals, populations and lower growth in Medicare Part A and B expenditures (the three-part aim). The organization of an ACO is described in the HHS Final Rule(4). Each ACO agreement period will typically be for a period of not less than 3 years, although it may be longer. An ACO will need to have a minimum of 5,000 Medicare fee-for-service (FFS) beneficiaries assigned to it to qualify. If the eligible Medicare FFS beneficiary patient panel drops below this number during the agreement period a warning will be issued and the ACO will be placed on a Corrective Action Plan (CAP), but would still be eligible for shared savings during that performance year. If the population remains low for an additional performance year that ACO would no longer be eligible for shared savings payments. An ACO will be a collection of Medicare-Enrolled provider Tax Identification Numbers (TIN).

Patient Assignment

Patients retain their freedom of choice under traditional FFS Medicare and the patient's are assigned to ACO's based on where and from whom they receive a plurality of their primary care during the performance year. This includes patients that are typically designated as noncompliant or unmanageable. ACO's will need to establish a method by which the patients can opt out of this data sharing process. Patients may continue to receive care from providers both inside and outside the ACO.

Payments

There are several different methods of payment provided for under ACO programs: Shared Savings Program Rewards ACO's that lower their health care costs while meeting performance standards on quality of care. Providers continue to receive traditional Medicare FFS payments under Medicare parts A and B but may be eligible for additional payments if they meet quality and savings requirements. For ACOs that successfully meet quality and savings requirements the Medicare Program can share a percentage of the achieved savings with the ACO. Advance Payment ACO

Contrast with Health Maintenance Organizations

Unlike an HMO patients will be able to see providers outside of the ACO network at no extra cost. There is an internal pressure to keep patient and provider services within the ACO, since this will better lead to shared organizational savings.

References

1. Cohen J, "A Guide to Accountable Care Organizations and their Role in the Senate's Health Reform Bill;" Health Reform Watch Mar 2010. [1]

2. Devers K, Berenson R, "Can Accountable Care Organizations Improve the Value of Health Care by Solving the Cost and Quality Quandries?" Urban Institute October 2009. [2]

3. Centers for Medicare and Medicaid Services Accountable Care Organization Overview. [3]

4. Department of Health and Human Services Centers for Medicare and Medicaid Services; Medicare Program: Medicare Shared Savings Program: Accountable Care Organizations; Federal Register Vol 76, No 212 Nov 2,2011.[4]

Submitted by Gerry Dunlap