Tuesday, 08 December 2015 22:59

ACOs: The Evolving Frontier

Written by Kai Tsai

Recently, the Office of Inspector General (OIG) for the U.S. Department of Health and Human Services (HHS) unveiled its formal Work Plan for the 2016 fiscal year (which began on Oct. 1, 2015), and it outlines the new and ongoing activities the OIG plans to focus on during the current fiscal year and beyond. Created in 1976, the OIG is responsible for providing independent and objective oversight of HHS programs, including Medicare and Medicaid, in order to combat system fraud, waste, and abuse.

One area of particular interest, at least for those healthcare executives evaluating their participation in Medicare risk-based payment models, is the OIG’s new focus on Accountable Care Organizations (ACOs) participating in the Medicare Shared Savings Program (MSSP). The OIG will be reviewing the ability of this group of ACOs to meet quality measures and achieve cost savings during the program’s first three years in hopes of uncovering the associated strategies that successful practices are employing.

The OIG’s review also will include an evaluation of the 33 quality metrics that the Centers for Medicare & Medicaid Services (CMS) uses to measure an ACO to determine if any changes are needed. Currently, ACOs must address – and meet – quality metrics in five key areas to share in savings, and those metrics include patient/caregiver experiences, care coordination, patient safety, preventative health, and service to at-risk populations. Results, which are expected to be released to the public during the 2017 fiscal year (on or after Oct. 1, 2016) will help address key pain points for participating providers and enable CMS to further refine its Medicare programs.

The announcement of the OIG’s latest work plan comes after encouraging news from CMS, which released its full report on quality and financial performance of Medicare ACOs in 2014. According to the latest data, ACOs are continuing to improve care quality for Medicare beneficiaries while also achieving cost savings. A demonstration of increasing participant success with each year of experience was also reflected in the data, with 37 percent of 2012 ACOs in their third year creating shared savings, plus 27 percent of second-year 2013 ACOs and 19 percent of first-year 2014 ACOs. More specifically, 92 ACOs participating in the MSSP contained spending by more than $800 million below their targets and earned performance payments in excess of $340 million. It also should be noted that those considering participation in a MSSP should strive to achieve sustained shared savings over time versus significant success in year one.

What Does this Mean?

The ACO model is clearly viable, and it could generate both clinical and financial success for healthcare providers interested in better coordinating care for their Medicare populations. In fact, the MSSP has been a very effective catalyst to drive more providers to invest in accountable care initiatives, and it is widely recognized as one of the government’s most innovative programs to date. Due to the ACO model and select other CMS initiatives incentivizing providers to implement or join Medicare ACOs, it’s expected that physician participation in ACOs will jump significantly over the next two years.

However, healthcare’s rapid evolution and changing landscape is forcing many providers to implement change now and evaluate their role in assuming Medicare risk. Waiting until the OIG’s assessment is complete to consider your organization’s participation in this type of arrangement – or not evaluating additional opportunities to expand into more financially rewarding areas – constitutes a missed opportunity. Additionally, early Medicare ACO participants, granted that they are meeting quality care measurements and other guidelines, may be provided incentives and flexibility not offered to providers who delay in partaking in these programs. Early adopter benefits may include waived and reduced patient copays and deductibles and the allowance of patient attestation, designed to support communication between physicians and beneficiaries.

The Current ACO Landscape

ACOs continue to be recognized as an important care delivery and financing model to address the continued challenges of rising healthcare costs and fragmented care delivery. While commercial ACOs also exist in a variety of different forms, Medicare has designed several other ACO programs in addition to their MSSP. These efforts include:

ACO Investment Model: Created to enable ACOs participating in the MSSP to test pre-paid savings in underserved or rural areas.

Advance Payment ACO Model: Designed for eligible provider organizations that are already in or interested in MSSP participation.

Next Generation ACO Model: Structured to assist ACOs that are experienced in managing care for populations of patients.

Pioneer ACO Model: Established for healthcare providers that are already adept in care coordination for patients across multiple care settings.

Successful participants in these programs have effectively aligned their providers to deliver high-value care, established quality guidelines, and educated their patients, these ranking among many other accomplishments. Some also have implemented clinical information systems, while others manually capture data to report to CMS.

Evaluating – and Building – a Successful ACO

As providers across the country assess their ability to participate in a Medicare ACO model, they first must assess their position and determine the best path to move forward in three key stages: integration, delivery system improvement, and accountability.

Phase 1: Integration

Providers must create an integrated organization by building the culture and capabilities to organize for and deliver coordinated care. The key steps associated with this phase include:

  • Defining the right network of providers for both inpatient and outpatient needs;
  • Analyzing intuitional performance, physician panels, and referral patterns;
  • Understanding drivers of hospital cost and utilization, and ancillary services’ cost and utilization; and
  • Ensuring leadership, governance structure, and alignment channels are in place to influence and drive physician participation.

Phase 2: Delivery System Improvement

To be successful, the healthcare provider must create the necessary infrastructure, which is vital to enable effective care coordination and fully integrated care delivery. The essential step in this stage is to understand the current system capabilities to measure performance and translate that to deliver actionable information to the physician for timely and effective decision support.

Phase 3: Accountability

To truly move to full accountability, a provider organization must have expertise in monitoring outcomes, managing the associated risks and costs, data collection, information sharing for the purpose of promoting accountability, and ultimately, delivering optimal outcomes across the patient population.

As Medicare continues its transition to value-based payment, healthcare organizations must evaluate opportunities associated with assuming greater levels of risk for the populations they are managing. Hospitals and health systems are truly in the best position to drive higher quality more efficiently.

If you’re interested in receiving automatic updates on when reports are issued via the OIG’s website, you can subscribe to the organization’s email list here.

About the Author

Kai Tsai is Valence Health's executive vice president of advisory services and strategic initiatives. With deep expertise in Medicare and senior markets, he's responsible for leading the operations of the company's consulting practice and managing key client relationships, and is a government programs industry leader. Kai earned his master's of health services administration from the University of Michigan.

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