What You Should Know About Accountable Care Organizations

Beth A. Kase, JD

Accountable care organizations (ACOs) may permit podiatric physicians to participate in shared savings via a Medicare program. This author details how podiatric practices can take advantage of ACO participation and provides insights on the specifics of the programs.

Healthcare reform has ignited many buzzwords. By now, you certainly have heard about accountable care organizations (ACOs) and the Medicare Shared Savings Program although you still may have questions about how they affect you as a DPM.

   More than 250 organizations are participating in various Medicare shared savings initiatives.1 The Centers for Medicare and Medicaid Services (CMS) report that as of January 2013, more than 4 million traditional Medicare fee-for-service beneficiaries (up from 2.4 million in 2012) are receiving care from providers participating in Medicare shared savings initiatives.2 That represents more than 10 percent of the overall Medicare fee for service program, according to Jonathan Blum, the CMS Acting Principal Deputy Administrator and Director of the Center for Medicare.3 You may or may not be participating in an ACO yet but either way, you need to be informed about what an ACO is and how it might affect your practice.

   The ACO is a separate legal entity with its own taxpayer identification number. Often hospital systems and networks of physician groups form the ACO, but roughly half of all Medicare Shared Savings ACOs are physician-led organizations. Approximately 20 percent of ACOs include community health centers, rural health centers and critical access hospitals that serve low-income and rural communities.4 The ACO contracts with the CMS to participate in the Medicare Shared Savings Program, which the CMS established on January 1, 2012 pursuant to the Patient Protection and Affordable Care Act of 2010 § 3022.4

   The Medicare Shared Savings Program’s goals are to promote accountability for a patient population; coordinate care under Medicare Parts A and B; and encourage investment in infrastructure and improved care processes for high quality care and efficient service delivery. The ACO is the central healthcare model to establish the Medicare Shared Savings Program’s goals.

   The ACO’s revenue comes from shared savings it receives from Medicare if the cost of Medicare Parts A and B services to the ACO’s patient population is lower than the benchmark and the ACO meets certain quality measures.4 Accountable care organizations that also share the risk of increased costs would receive a greater potential share of cost savings than ACOs that are solely aligned to share in potential savings. Healthcare providers still get traditional Medicare fee-for-service payments for providing the care whether or not the ACO meets the cost saving and quality measure targets. Therefore, if you are part of an ACO, you are still getting paid on a fee-for-service basis from Medicare for your services.

   The structure of an ACO is “patient centered” with the primary care physician playing the central role of coordinating and facilitating access to needed services and specialists. The ACO must be accountable for at least 5,000 Medicare fee-for-service beneficiaries for a three-year period while also adhering to CMS defined quality measures.4 As I will explain later in this article, generally beneficiaries are attributed to the ACO to which the primary care doctor belongs. Keep in mind that rules governing ACOs are subject to change as all entities involved, including the CMS, gain more experience and knowledge.

   Is ACO just another name for HMO? While the ACO network bears some resemblance to health management organizations (HMOs), there are significant differences. Unlike with HMOs, patients are free to seek services or providers outside of the ACO network. The cost to the patient does not change if he or she sees a provider outside of the ACO network. Also unlike HMOs, generally the ACO does not function as a pre-paid per capita (i.e., capitation) model although ACOs could move in this direction in the future. Medicare patients enrolled in a Medicare Advantage Plan are not Medicare ACO beneficiaries.

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