Foundations for a Successful Patient-Centered ACO: Federal Law Background

1. Foundations for a Successful Patient-Centered ACO: Federal Law Background Jim Dearing, D.O., FACOFP, FAAFP Chief Medical Officer, Physician Network John C. Lincoln Health Network

2. ACO Video http://www.youtube.com/watch?v=lF8bK7AJyL0

3. There have been many precursors to ACOs (PHOs, MSOs, HMOs, patient centered medical homes), but recent interest in Accountable Care Organization development started with the passage of the Affordable Care Act of 2010.

5. What is an ACO?

6. An Accountable Care Organization “. . . 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.”(Centers for Medicare and Medicaid Services, 2010.)

7. Accountable Care Organizations are established to manage the care of populations. • ACOs must have, at a minimum, sufficient numbers of primary care physicians to provide primary care for at least 5,000 Medicare patients. • ACOs also must “have defined processes to (a) promote evidenced-based medicine; (b) report the necessary data to evaluate quality and cost measures, Electronic Prescribing (eRx), and Electronic Health Records (EHR); and (c) coordinate care.”

8. Other requirements for ACOs • Have a formal legal structure to receive and distribute shared savings • 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. • Demonstrate it meets patient-centeredness criteria, as determined by the Secretary.

9. ACO Payment Flow from CMS CMS Assigns Medicare Patients to ACOs based on historic E/M billing by the ACO’s primary care physicians. ACO providers (Physicians, Hospitals and others) bill Medicare fee for service. Years 1 - 3 CMS calculates costs of caring for patients assigned to the ACO and distributes incentive payments End of Year 3

10. In October 2010, 64% of all US health systems were planning to create ACO programs.

11. October 2010 – ACO = Awesome Consulting Opportunities!

12. March 2011 – Proposed CMS rules for ACO’s caused most health care organizations to re-think and postpone ACO development

13. Suddenly, ACOs didn’t look like such a good idea . . . • Tremendous costs to establish • High financial risk and limited upside rewards • ACOs would be required to track at least 64 quality measures • Retro Attribution of patients!

14. AAFPresponse to CMS proposed ACO rules • Allow primary care physicians to join multiple ACOs • Provide more flexibility so that ACOs don’t have to be part of a large health care system • Limit number of quality measures to reduce cost and complexity • Narrow definition of primary care physicians to family medicine, internal medicine, pediatrics and geriatrics

15. What is next for ACOs and Healthcare Integration? • Continued cost pressure from CMS and commercial payors will result in new “ACO” like organizations which allow providers to accept population risk. • The development of payor sponsored provider networks designed to severely limit hospital and subspecialist physician utilization. • New provider-sponsored clinical integration models that allow investment in information systems, quality management and other tools necessary to manage the health of populations.

16. April 2012 • FIRST ACCOUNTABLE CARE ORGANIZATIONS UNDER THE MEDICARE SHARED SAVINGS PROGRAM • On April 10, 2012, the Centers for Medicare & Medicaid Services (CMS) announced the selection of the first 27 accountable care organizations (ACOs) to participate in the Medicare Shared Saving Program (Shared Savings Program).  The selected organizations have agreed to be responsible for improving care for nearly 375,000 beneficiaries in eighteen states through better coordination among providers. • http://www.cms.gov/apps/media/press/facsheet.asp?

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