Tag Archives: Accountable Care Organizations

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How Do Accountable Care Organizations Work?

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In my last post I gave an overview of what Accountable Care Organizations (ACOs) are.  Before I start to explain the care coordination strategies they commonly use,  I’d like to go a little deeper into how an ACO has patients (Medicare beneficiaries) attributed to it and where savings can be found while maintaining quality.

Beneficiary Attribution

Let’s consider an ACO formed by a primary care medical group.  These physicians practice primary care and would include family practitioners, internists and, since the patients we’ll talk about are Medicare beneficiaries, geriatricians.  Medicare would look at all the claims for services of any patient the medical group took care of within the past several years (usually 3).  Medicare determines from which physician the patient got most of their primary care services & attributes that patient to that physician.  A key point to remember is that even though a Medicare beneficiary is attributed to a specific primary care physician, the patient can see any physician they want.  The patient is not a “member” of the ACO.  However, since that patient is attributed to the ACO, all their health care services become the responsibility of the ACO to coordinate.  The patient has all the freedom to go to any physician in the country who accepts Medicare for their health care needs.  They are still regarded as being in the traditional Medicare program.

Cost Benchmark

Once Medicare has attributed their patients to the ACO, it calculates a cost benchmark that will serve as the target for the ACO.  The benchmark is derived by a formula that looks at the previous three years of costs for the attributed beneficiaries and is adjusted for inflation.  If the ACO is able to provide quality care as measured by 33 quality measures and keep costs under the benchmark they will share in a portion of the savings with Medicare.  For most ACOs there is no penalty if costs are over the benchmark.  The ACO is not responsible for paying the care providers.  Medicare still does that.  Remember, the costs are all the costs (except Part D drug costs) for the attributed beneficiaries, including hospitalizations, tests, surgical procedures and physician charges.

Cost Reduction Opportunities

So where will the savings come from?  There are several main areas – areas that won’t compromise quality, but rather increase it.  Our system of health care delivery is hardly an efficient one.  Important clinical information is often not transmitted promptly to the next person involved in a person’s care.  Consequently, tests are often repeated unnecessarily.  More importantly misunderstandings and miscommunications can result in complications and poor clinical results that require more services which just add to the costs.

In my next post I’ll talk about the opportunity surrounding hospital discharges as an example of how care coordination can improve quality and lower costs.

For Your Health – Dr. Bob

 

Something New in Medicare Healthcare Delivery – The ACO

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So, where have I been? Anyone who has written a successful blog will tell you that you need to publish often to attract readers.  It’s been months since my last post.  I apologize for the delay, but I’ve been busy working as the Medical Director for an Accountable Care Organization (ACO) since August and think some of my experiences can offer some insights about new developments in our health care system –  insights that everyone can use.  In this post, I’ll give you a brief overview of Accountable Care Organizations.

What is an ACO?  CMS through regulations found in the Patient Protection and Accountable Care Act is encouraging the formation of ACOs to address some of the problems in our health care delivery system through innovation that moves us from a fee for service to fee for value.  Here’s the definition from the Centers for Medicare & Medicaid Services (CMS):

“ACOs are groups of doctors, hospitals, and other health care providers, who come together voluntarily to give coordinated high quality care to the Medicare patients they serve. Coordinated care helps ensure that patients, especially the chronically ill, get the right care at the right time, with the goal of avoiding unnecessary duplication of services and preventing medical errors. When an ACO succeeds in both delivering high-quality care and spending health care dollars more wisely, it will share in the savings it achieves for the Medicare program.”

Through an application process, ACOs are designated by CMS.  They are focused on achieving the Three-Part Aim of:

  • Improving the experience of care
  • Improving the health of populations
  • Reducing per capita costs of healthcare

To make sure that quality is enhanced, ACOs must report 33 quality measures within the following 4 areas:

  • Care coordination & patient safety
  • Preventive health services
  • Care for at-risk populations
  • Patient & caregiver experience of care

In my next post I’ll talk about some of the opportunities for ACOs to improve how care is delivered for Medicare patients, many of which are applicable to the entire U.S. population.

For Your Health – Dr. Bob