Q. What drives the Centers for Medicare & Medicaid Services to consider alternatives to paying providers under the current Medicare system?
CMS believes that a shift in how providers are paid must occur to preserve the Medicare system. With 75 million baby boomers transitioning to Medicare starting in 2011, many question the continued viability of the current system. The Medicare Trustees Report 2013 indicates a depleted Medicare Trust Fund in 2026, which was recently updated from 2024.
Q. Are Accountable Care Organizations one such alternative payment system?
ACOs are a form of a Shared Savings Program, which is an alternative approach to the current standard fee-for-service Medicare payment system. Shared Savings Programs reward providers who reduce cost, meet specific quality standards and continue to deliver high-quality care to patients.
Q. Are Shared Savings Program concepts aligned with the Affordable Care Act?
The Affordable Care Act created both the Medicare Shared Savings Program and the concept of ACOs. The ACA supports the purpose of these programs and states that the SSP “promotes accountability for a patient population and coordinates items and services under Part A and B, and encourages investment in infrastructure and redesigned care processes for high quality and efficient service delivery.”
Q. Will this Shared Savings Program save CMS dollars?
CMS actuaries estimate a $940 million savings in four years, but this is less than 1 percent of the anticipated expenditures during that time.
Long term, regulators hope for a shift in practice patterns that will ultimately lead to greater savings.
Q. Is an ACO just another kind of health maintenance organization?
No. A key difference between ACOs and HMOs is that providers run an ACO while insurance companies run HMOs.
Q. How are Accountable Care Organizations structured?
The structure of an ACO loosely resembles a health maintenance organization. An ACO is a provider network that coordinates to give quality care and reduce cost. Groups of physicians, hospitals and other healthcare providers come together to form an ACO. Once formed, the ACO must establish a governing body, complete an application for CMS and satisfy several requirements. An ACO must serve at least 5,000 Medicare fee-for-service patients, and providers must participate for at least three years.
Q. Do different ACO models exist?
Yes. ACOs must decide whether to participate in a one-sided model or a two-sided model. A one-sided model, also known as an “upside risk category of shared savings,” permits sharing in the savings without liability for any losses. The two-sided model, “upside and downside risk category of shared savings,” provides an opportunity for a greater savings share, but also holds the ACO accountable for losses. Specific loss thresholds exist to cap the ACO’s loss sharing rate.
Q. Will participating providers face reduced reimbursements on their claims if they join an ACO?
No. Unlike HMOs, where physicians generally take lower reimbursement rates, ACO participants continue to receive the same payments under the Medicare Physician Fee Schedule.
Q. What motivates a provider to join an ACO if reimbursement rate are the same as their MPFS rates?
The motivator to participate in an ACO is the potential to receive a bonus. ACOs that save on the cost of care while maintaining quality share the savings with CMS. CMS will develop the metrics and benchmarks and perform periodic assessments of the ACO’s performance.
In theory, if a group of providers can reduce duplication of services, only order necessary diagnostic tests and utilize preventative measures, then an ACO can improve care for the chronically ill and simultaneously lower cost. To better coordinate care, and with the beneficiaries’ permission, ACOs will be able to obtain Medicare claim data for beneficiaries from CMS.
Q. How will quality of care be measured?
Measures of quality currently exist within the CMS bonus systems for the Physician Quality Reporting System, the now expired E-Prescribing program and Electronic Health Records. Therefore, ACOs do not have to reinvent quality measures, and many ophthalmologists and optometrists are already familiar with these quality measures, as shown by their high rate of participation in existing programs. The primary focus associated with quality will be on the following:
• patient experience;
• care coordination;
• patient safety;
• preventive health; and
• at-risk populations.
Q. What if an ACO doesn’t meet performance and savings benefits?
It is possible that ACOs that do not make necessary benchmarks or savings targets will have to pay a penalty. ACOs that are unable to save money may also have to make further investments to address areas that are limiting their ability to make required benchmarks.
Q. Must providers participate in an ACO?
Participation in a Medicare ACO is voluntary, although CMS hopes that practitioners will see a benefit to joining.
Q. Has CMS released any information about the money saved by ACOs?
Yes. In January, CMS announced that ACOs saved $380 million in the first year of operation. Of the 114 Shared Savings Program ACOs that participated, 29 percent generated enough savings to be eligible for bonuses totalling $126 million.
Q. Are patients required to join an ACO?
No. Patients do not “join” an ACO; physicians do. Medicare fee-for-service patients continue to see Medicare providers as they always have. Some Medicare patients are assigned to an ACO, but patients may choose their providers without regard to the physician’s participation or nonparticipation in an ACO.
Q. May ophthalmologists and optometrists join more than one ACO?
The final rule from CMS restricts providers of primary-care services to just a single ACO; however, specialists may join more than one ACO. This is ostensibly good news for eye-care providers, but there has been a glitch with specialists trying to enroll in more than one ACO: CMS limits practices that file claims with Evaluation and Management codes to one ACO. Consequently, many specialty societies are working with CMS to address this issue.
Ms. McCune is vice president of the Corcoran Consulting Group. Contact her at DMcCune@corcoranccg.com.