Kusserow’s Corner: Are Accountable Care Organizations Here to Stay?

Our firm receives almost daily questions about accountable care organizations (ACOs).  These questions revolve around why ACOs are created and whether they will stand the test of time or just be another government experiment that falls by the wayside.  Many are hesitant of going down a complicated and potentially costly path of meeting qualification standards without some assurance that the promises of benefits can be achieved.  In order to answer these questions, it is important to begin by looking at the health care delivery system as it exists today, alongside what is being promoted through ACOs.

The current health care system pays for discrete medical services that are not based upon outcome.  The passage of the Patient Protection and Affordable Care Act (PPACA) (P.L. 111-148) included granting authority for CMS to create ACOs as a means to improve the quality of health care services and, at the same time, reduce the rate of growth in costs.  CMS launched this program with the stated goal to strengthen the coordination of care between doctors, hospitals, and other health care providers.  This, in turn, is intended to improve the quality of care for Medicare beneficiaries and maintain a patient-centered focus, while reducing the rate of growth in health care spending.

The major incentive for ACOs is the benefit of the Shared Savings Program, wherein ACOs share with Medicare any savings generated from lowering the growth in health care costs and meeting quality standards.  To qualify as an ACO, a number of eligibility requirements must be met.  CMS has established 33 quality measures on care coordination and patient safety, appropriate use of preventive health services, improved care for at-risk populations, and patient and caregiver experience of care.

Key features of the program are local accountability within a community to manage the full spectrum of health care services, which includes prevention and health care services to skilled nursing care.

The program is designed so that an ACO is a provider-led organization whose mission is to be accountable for the overall cost and quality for a full spectrum of care for a defined population. The ACO therefore becomes a basic method of decoupling volume and intensity from revenue and profit.  ACOs that hit quality standards while slowing spending growth share the total savings with the payers. This is to create an incentive for ACOs to reduce expenditures through systematic efforts to improve quality and reduce costs. Savings are calculated on historical spending patterns for a patient population. The ACO then becomes accountable for cost, quality and capacity.  A critical feature of the program is that ACOs must maintain a core set of performance measures that can include clinical process measures, outcome measures, and patient experience measures to evidence appropriate care is being delivered and that cost savings are not the result of limiting necessary care.

In gauging whether this new program is gaining traction, I note that, so far, over 250 ACOs have been established, with many more in the process of gaining approval.

Richard P. Kusserow was the DHHS Inspector General for over eleven years.  He is the founder and CEO of Strategic Management, a firm that has been providing specialized compliance advisory services since 1992 to 2,000 clients. For more information, contact him at rkusserow@strategicm.com.

Connect with Richard Kusserow on Google+ or LinkedIn.
Copyright © 2013 Strategic Management Services, LLC.  Published with permission.