What You Should Know About Accountable Care Organizations

Author(s): 
Beth A. Kase, JD

   If you are not a participant in an ACO, a patient still has the freedom to go outside of the ACO network for medically necessary services and this can include you as a DPM. According to CMS, a beneficiary always retains the right to see the specialist of his or her choice, whether the specialist is a part of an ACO or not. The CMS is responsible for providing educational materials for beneficiaries so they understand their rights. However, you may want to communicate proactively with your patients. Your relationship with a patient need not end, even if you do not contract with or are not part of the Medicare ACO.

A Guide To Beneficiary Assignment To An ACO

Beneficiary assignment occurs in two steps. The first step is that CMS assigns beneficiaries who have received primary care services from a primary care physician to that primary care physician’s ACO. For any remaining beneficiaries who did not receive any primary care services from a primary care physician but received at least one such service from a physician specialist, nurse practitioner, clinical nurse specialist or physician assistant, the second step is the CMS assigns such beneficiaries to the ACO of the non-primary care physician from whom the beneficiary received the plurality of primary care services.

   The CMS provides the ACO with a preliminary prospective assignment of beneficiaries based upon the patients’ past utilization of primary care services. The CMS will conduct a final reconciliation of assigned beneficiaries after each performance year based on actual utilization. The healthcare community has voiced concerns that this final retroactive reassignment impedes the ACO’s ability to coordinate and monitor patient care for the ACO population. However, the CMS has refused to assign patients to an ACO prospectively.

Essential Insights On Savings Considerations With ACOs

The agreement between the CMS and an ACO is three years in duration. The CMS allows ACOs to elect to participate under two different shared savings models, either one-sided or two-sided. Under the one-sided model, during the first three-year agreement, an ACO shares only savings (if any). Upon the next agreement, the ACO assumes risk for shared losses in addition to shared savings, effectively transitioning to the two-sided model. Under the two-sided model, during the initial three-year agreement, an ACO assumes risk for losses as well as shared savings (if any).

   By sharing risk, the ACO must repay to the CMS any shared losses for expenditures that exceed the benchmark, subject to certain limitations. The benchmark is initially based on the weighted average of Parts A and B expenditures for the ACO population for the three years preceding the initial agreement. Then it will be updated to the applicable performance year based on certain demographic changes and projected risk factors for new beneficiaries.

   An ACO is eligible for shared savings only if actual Medicare Parts A and B expenditures are below the benchmark amount by at least the “minimum savings rate.” The minimum savings rate for the one-sided (shared savings only) model is between 2 and 3.9 percent depending upon the size of the ACO’s assigned population. The minimum savings rate for the two-sided model (shared savings and risk) is 2 percent. The shared savings is based on the first dollar once the ACO meets the minimum savings rate.

   The CMS also established maximum percentage savings. In the one-sided model, the ACO can share up to 50 percent of savings while the two-sided model enables ACOs to share up to 60 percent of savings. The purpose of these boundaries is to protect the CMS from paying bonuses to ACOs for random, statistical fluctuations that are unrelated to ACO activities while also encouraging participation and investment in the program.

   An ACO must have clear criteria by which it will distribute possible shared savings among participants and how it will use shared savings to improve care for beneficiaries and decrease beneficiary spending. Conversely, an ACO that is subject to shared losses must have a mechanism for payment of its share of losses. The CMS will make shared savings payments directly to the ACO, not to the individual providers. To reiterate, providers and suppliers in the ACO will still receive traditional Medicare fee-for-service payments for their services.

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