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ACOs 101: The Basics

What is an ACO?. An Accountable Care Organization, also called an ?ACO", is an organization of health care providers that agrees to be accountable for the quality, cost, and overall care of Medicare beneficiaries who are enrolled in the traditional fee-for-service program who are assigned to it. Med

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ACOs 101: The Basics

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    2. ACOs 101: The Basics Fred J. Pane R. Ph., FASHP Sr. Director The Medicines Company

    3. What is an ACO? An Accountable Care Organization, also called an “ACO”, is an organization of health care providers that agrees to be accountable for the quality, cost, and overall care of Medicare beneficiaries who are enrolled in the traditional fee-for-service program who are assigned to it

    4. What forms of organizations may become an ACO? According to the statute: Physicians and other professionals in group practices Physicians and other professionals in networks of practices Partnerships or joint venture arrangements between hospitals and physicians/professionals Hospitals employing physicians/professionals Other forms that the Secretary of Health and Human Services may determine appropriate

    5. What are the requirements that must be met by those organizations? According to the statute organizations must: Have a formal legal structure to receive and distribute shared savings Have a sufficient number of primary care professionals for the number of assigned beneficiaries (to be 5,000 at a minimum) Agree to participate in the program for no less than a 3-year period Continued on next slide

    6. What are the requirements that must be met by those organizations? (continued) Have sufficient information regarding participating ACO health care professionals as the Secretary determines necessary to support beneficiary assignment and for the determination of payments for shared savings Have a leadership and management structure that includes clinical and administrative systems Have defined processes to (a) promote evidenced-based medicine, (b) report the necessary data to evaluate quality and cost measures (this could incorporate requirements of other programs, such as the Physician Quality Reporting Initiative (PQRI), Electronic Prescribing (eRx), and Electronic Health Records (EHR), and (c) coordinate care Demonstrate it meets patient-centeredness criteria, as determined by the Secretary

    7. The NJ Landscape New Jersey's Senate committee on health, human services and senior citizens has approved legislation that would allow healthcare providers to develop accountable care organizations for Medicaid recipients The bill would allow five groups of healthcare providers and managed care companies that treat at least 5,000 Medicaid patients to form ACOs and would pay financial incentives to the groups that produce cost savings to the Medicaid program by better coordinating medical care

    8. The NJ Landscape Two New Jersey independent practice associations are linking together to form a new accountable care organization and, according to a business associate, this move is being done to counter the rapid growth of a larger medical group in the region The two groups, Vista Health System IPA and Central Jersey Physician Network IPA, are forming Optimus Healthcare Partners, an ACO with some 650 physicians, according to a news release. The two groups had been affiliated with a third organization, United Medical Group, and together the three groups worked with a management services organization called Partners in Care, or PIC “What we've been doing for 15 years is exactly what accountable care organizations are being formed to do,” said Kevin O'Brien, CEO of PIC, who said his organization will be working on five to 15 different initiatives that are developing in the region as an ACMSO. This includes Optimus Healthcare. “The intent is for the parties to maintain and evolve our business relationship,” O'Brien said.

    9. The NJ Landscape New Jersey: Morristown, N.J.-based Atlantic Health has launched an ACO that is expected to begin enrolling patients in January 2012, Modern Healthcare reports. About 100 independent physicians and 200 Atlantic Health physicians will participate in the organization, which will operate through a newly formed corporation (Evans, Modern Healthcare, 12/9 [subscription required]).

    10. Private Payers are ahead of CMS: CIGNA Collaboratives CIGNA current initiatives statistics: 12 collaborative initiatives 11 states ~100k customers ~1,800 physicians

    11. There are advocates! Illinois: The Illinois Hospital Association (IHA) and Blue Cross and Blue Shield of Illinois (BCBSIL) have launched an initiative to reduce hospital readmission rates in the state, HealthLeaders Media reports. BCBSIL plans to invest $1 million per year in the four-year Preventing Readmissions through Effective Partnerships initiative, and more than 200 hospitals in the state have vowed to reduce readmissions by the end of 2013. The initiative will include standardized discharge planning with follow up, self-management instruction and goal setting. According to BCBSIL's chief medical officer, aligning the state's readmission rate—which is ranked 44th in the country among Medicare patients—with the national average could save $150 million in the first year (Commins, HealthLeaders Media, 2/2).

    12. NEJM Article Feb 2, 2011 Assert that Academic Medical Centers, can't remain relevant in the face of sweeping change, but can lead the way by serving as examples of successful transformation while continuing to excel in achieving their mission. For some AMCs, this may take the form of becoming accountable care organizations, as established in the Affordable Care Act.

    13. Not everyone is convinced! According to the New York Times' Pauline Chen, the health sector has yet to convince patients that ACOs provide a promising payment and delivery model for health care. She notes that many people do not understand the distinction between ACOs and HMOs. She suggests being "more transparent about the changes and results, providing patients with information on the quality and benefits of accountable care organizations" and warns that not engaging patients in ACOs could "quickly tip the savings balance" (Chen, Times, 1/27).

    14. ACO Fallout: Mergers and Acquisitions? Hospital M&A Activity Jumped 33 Percent in 2010 2/7, Molly Merrill, Healthcare Finance News reports “Hospital mergers and acquisitions saw a marked increase in activity in 2010, according to Deal Search Online...According to Irving Levin Associates, Community Health Systems' proposed takeover of Tenet Healthcare for $7.3 billion signals a willingness of companies to use the large amounts of capital they've been sitting on since the recent and ongoing financial crisis.”

    15. ACOs, the final frontier? Mayo Clinic launches new healthcare delivery center The Mayo Clinic has created the Center for the Science of Health Care Delivery, a new initiative that will focus on creating improved approaches to how healthcare is delivered http://www.cfmediaview.com/lp1.aspx?v=7_76113270_5736_9

    16. References Medicare “Accountable Care Organizations”, Shared Savings Program-New Section 1899 of Title XVIII – CMS Office of Legislation

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