Accountable Care Organization (ACO) Resources

Background

The Affordable Care Act, signed into law by President Obama in March 2010, seeks to improve the quality, cost, and delivery of healthcare services to Medicare patients.

Section 3022 of the Affordable Care Act amended Title XVIII (i.e., Medicare legislation) of the Social Security Act by requiring the Centers for Medicare & Medicaid Services (CMS) to create a Shared Savings Program.

The purpose of the Shared Savings Program is to promote more efficient care and delivery of services. CMS will implement this initiative through Accountable Care Organizations (ACOs).

What Is an Accountable Care Organization (ACO)?

An Accountable Care Organization is a type of shared payment and healthcare delivery model that links reimbursement with quality measures in the Medicare population.

As defined by the CMS, "Accountable Care Organizations (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".

For additional information on Accountable Care Organizations, please visit the links below:

Centers for Medicare & Medicaid Services, "What you Need to Know About Accountable Care Organizations"
Centers for Medicare & Medicaid Services, "Accountable Care Organizations: Improving Care Coordination for People with Medicare"
Congressional Research Service, "Accountable Care Organizations and the Medicare Shared Savings Program"
Hart Health Strategies, "Medicare's Shared Savings Program: Accountable Care Organizations Proposed Rule"

Final Rule

In October 2011, CMS published their Final Rule for Accountable Care Organizations.

For additional information please visit:

Hart Health Strategies, "Summary of AMA Briefing on the Medicare Shared Savings Plan: Accountable Care Organizations Final Rule"
Hart Health Strategies, "Medicare Shared Savings Program: Accountable Care Organizations (ACO) Final Rule"

Payment Models

ACOs participating in the Advance Payment ACO Model will receive three types of payments:

An upfront, fixed payment;
An upfront, variable payment;
A monthly payment of varying amount depending on the size of the ACO.

ACOs participating in the Pioneer Payment ACO Model will receive payment based on a per capita expenditure of previous costs (benchmark) for a reference group of patients. After each performance period, total expenditures for the period would be compared against benchmark expenditures.

Participating ACOs would be rewarded with a portion of the savings or held accountable for increased costs. The benchmark can be adjusted based on the average growth percentage and absolute dollar growth for the reference group.

Who Is Eligible to Participate?

ACO professionals (i.e., physicians, practitioners, hospitals, and certain critical access hospitals) in group practice arrangements
Physicians in Independent Practice Associations
Partnerships or joint venture arrangements between hospitals and ACO professionals
Hospitals employing ACO professionals
Other groups of Medicare providers as determined by the Secretary

Is Participation Mandatory?

No, participation in ACOs for both the provider and patient is voluntary.

How Can I Apply?

The ACO application process consists of two steps. ACO eligible participants must first submit a Notice of Intent, prior to submitting an application, to get an ACO ID. Notices of Intent must be submitted by January 6, 2012 for participants wanting their ACO to go live on April 1, 2012 and by February 17, 2012 for participants wanting their ACO to give live on July 1, 2012.

The second step in the application process is to submit an application and accompanying required documents.

Download ACO applications

The application requires that the ACO applicant document a plan to 1) promote evidence-based medicine; 2) promote beneficiary engagement; 3) report internally on quality and cost metrics; and 4) coordinate care.