Chapter Three Accountable Care Organizations

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1 Chapter Three Accountable Care Organizations One of the most talked-about changes in health care delivery in recent decades is Accountable Care Organizations, or ACOs. Having gained the attention of both government and commercial payers, an ACO is held accountable for providing comprehensive health services to a population through a shared-services approach to reimbursement. The goal of an ACO is to encourage physicians and hospitals to coordinate care by holding them jointly responsible for its quality and cost. With their focus on coordinated care and closer integration of hospitals, physicians, other providers, and payers, ACOs are beginning to change how health care is organized, delivered, and reimbursed. This chapter will give you more information about ACOs and how they operate. It is based largely upon ACOs serving the Medicare population, though it also provides information on commercial ACOs that serve the privately insured population. Chapter Table of Contents Key Features Mechanics Quality Measures FAQs Commercial ACOs Top Things to Know about ACOs Resources List of Quality Measures Back to top> 1

2 Key Features What is an ACO? Accountable care organizations are groups of doctors, hospitals, and other health care providers that join together to provide coordinated care for patients. The goal is to improve quality and reduce overall costs. For ACOs that achieve specific quality and cost benchmarks, Medicare allows them to share in any cost savings. Medicare s long-term goal is for ACOs to share some of the financial responsibility of providing care to a specific population of patients. What kinds of providers can form a Medicare ACO? Medicare allows physicians, nurse practitioners, physician assistants, clinical nurse specialists, and acute care hospitals to form ACOs. It also allows critical access hospitals, federal qualified health centers, and rural health clinics if they meet all eligibility requirements. Other health care providers cannot form their own ACOs, but they can join an existing ACO as long as they are enrolled in Medicare. Are ACOs physical entities? ACOs are not physical structures. They are virtual organizations that coordinate a patient s care among various providers in various settings. How can providers become an ACO? Providers and payers that have joined together as an ACO must apply to the Centers for Medicare and Medicaid Services (CMS) and meet its requirements to become a Medicare ACO. Among other things, it must serve at least 5,000 Medicare fee-for-service patients and agree to continue as a Medicare ACO for at least three years. It must also create a governing body to ensure that the ACO meets CMS requirements. The governing body oversees distribution of any savings or losses that must be shared by the ACO members. How long does an ACO agreement with Medicare last? ACOs agree to become Medicare ACOs for three years. Back to top> 2

3 What are the ACO models that Medicare uses? Medicare has established three types of ACOs: Type of ACO Description Number* Shared Savings Advance Payment Pioneer *As of January, 2014 Providers share in cost savings if they meet quality and cost benchmarks. Same as shared savings, but providers receive upfront funding to encourage creation of an ACO Providers share in a greater percentage of financial savings, but also share in any financial losses experienced in ACOs. Pioneer ACOs are made up of providers already experienced in coordinated care and ACO-like arrangements Back to top> 3

4 Mechanics How are ACOs paid? Medicare will continue to pay individual providers and suppliers for specific items and services as it currently does under the Medicare fee-for-service payment systems. CMS also has developed a benchmark for each ACO against which the organization s performance is measured to assess whether it qualifies to receive shared savings, or for ACO s that have elected to accept responsibility for losses, potentially be held accountable for losses. How are shared savings and shared losses defined? During the first three-year agreement with Medicare, ACOs can select from two potential payment tracks: One-sided track: ACOs share in the cost savings, but do not share in any losses. Two-sided track: ACOs share in losses, as well as cost savings. To help balance potential losses, Medicare increases the ACO share of savings above the level provided in the one-sided track. How does Medicare calculate the amount of shared savings or shared losses? Though the two payment tracks are quite different, the underlying concept is the same. To calculate savings and losses, Medicare determines: How much would have been spent for the covered population if the ACO had not existed. How much the ACO actually spent, compared to this benchmark. If the amount that was actually spent is from 2% to 3.9% below the benchmark level, the ACO qualifies to share in any savings. How much of the savings the ACO gets will depend upon how well it performed on 33 quality measures. Likewise, if the amount that was actually spent is 2% over the benchmark level, the ACOs that have agreed to share financial risk will have to share in any losses that is, repay Medicare a portion of the losses. Again, the exact amount will depend upon performance in the 33 quality measures. Back to top> 4

5 Quality Measures How does Medicare factor in the quality measures? CMS uses 33 measures to judge the quality of care provided by ACOs and to help determine the amount that ACOs will receive in shared savings or lose in shared losses. Each ACO must submit data on how well it performed on these measures. The measures include four general domains: Patient Experience of Care, Care Coordination/Patient Safety, Preventive Health, and At-Risk Population. The measures cover such conditions as diabetes, colorectal cancer, breast cancer, COPD, vascular diseases, and risk of falling. Click to see the full list. Medicare will assign a score to performance on each of the measures. Will there be a minimum performance level on some or all of the measures? Medicare sets national benchmarks for ACO quality measures. ACOs must achieve at least 30% or the national 30 th percentile of the quality benchmark. If ACOs achieve this minimum level, they will then receive points on a sliding scale based on their actual level of performance. If they reach or exceed 90% or the 90 th percentile of the performance benchmark, they will receive the maximum number of points for that measure. The 2014 and 2015 quality benchmarks for each of the 33 quality measures are now available from CMS. Which measures will be used? The quality measures cover a wide range of conditions, such as diabetes, colorectal cancer, breast cancer, COPD, vascular diseases, and risk of falling. Click to see the full list. Are these quality measures the same as those used in other Medicare pay for performance programs? The ACO quality measures align with the measures that CMS uses in other quality programs, including the Physician Quality Reporting System and the Electronic Health Record (EHR) Incentive Programs. The measures also align with the U.S. Department of Health and Human Services National Quality Strategy and other HHS priorities. Back to top> 5

6 How much is the potential size of savings that can be shared? The potential amount of shared savings depends upon several factors: the number of beneficiaries in the ACO, the total amount of savings, and the performance on the 33 quality measures. One-sided ACOs those that only share savings may earn up to 50 percent based on quality performance. Twosided ACOs those that share savings and share losses may earn up to 60 percent. Back to top> 6

7 FAQs Where can we find a list of ACOs? Go to the State by State Guide on Medicare Accountable Care Organizations that is now available on the Philips Reimbursement Simplified website (www.philips.com/reimbursement). We have assembled a list of all ACOs that were approved by Medicare as of January, The list includes more than 360 ACOs serving some 5.3 million Medicare beneficiaries. Some ACOs include large integrated health systems, medical centers, and group practices, providing services in many states. Other ACOs combine only a hospital or group practice with a small number of other providers, and cover beneficiaries in a handful of counties or even just one city. Why were ACOs created? ACOs emerged from several forces: Evidence that large gaps in quality and patient safety existed throughout the fragmented US health care system. The growing belief that care for a patient should be coordinated across delivery settings and different providers. Rising costs from duplication, overlap, and inappropriate care. Criticisms of HMOs in the early 1990s that they did not give patients enough choices in providers or treatments. What does coordinated care mean? Coordinated care is when payers, hospitals, physicians, and other providers work together as an integrated team to provide seamless, high quality care for Medicare beneficiaries, even when care is provided by different providers, in different delivery settings, and over different intervals and episodes of care. What parts of Medicare services are included in ACOs? Individuals enrolled under the Medicare fee-for-service program under Parts A and B of Medicare will be assigned to an ACO. Back to top> 7

8 Do Medicare providers have to join in an ACO? Medicare does not require providers to participate in ACOs. It is entirely voluntary. How are patients assigned to an ACO? Medicare beneficiaries are assigned to ACOs on the basis of where, and from whom, they choose to receive most of their primary care services during the year. Patients will only be assigned to an ACO if they receive care from a provider that is part of an ACO. Also, patients can choose to leave providers who join an ACO, and they can seek care from providers and suppliers outside of the ACO. How is the payment distributed among the participants of the ACO? If there are savings, the ACO receives a single payment that it then distributes among the participants, who decide among themselves the percentage or amount that each participant receives. To what extent do ACOs focus on evidence-based medicine? To be eligible to participate in Medicare, an ACO must document in its application its plans for: promoting evidence-based medicine and patient engagement; reporting on quality and cost measures; and coordinating care. What kind of patient populations are in ACOs? In Medicare ACOs, they are a random cross-section of individuals who are included because their physician s practice decided to join the ACO. But ACO-like arrangements can also be set up between payers and providers to address the needs of one particular subset of patients, such as those with congestive heart failure. Providers assume accountability for improving the outcomes and lowering costs for this specific group, agreeing to share in savings or losses that might result. Medicare s bundled-payment program, called the Bundled Payments for Care Improvement Initiative, allows providers to enter such arrangements with Medicare. Some 500 provider organizations are participating. What does the term population health mean? Population health means providing for all of the health needs of a specific group of individuals as they move through the health care system and across the continuum of care. With ACOs, the level of reimbursement is directly affected by how well providers perform in improving quality and reducing cost for that population. Back to top> 8

9 So the ACO s bottom-line focus will be on managing performance for these populations and looking for tools, strategies, and best practices that will help them do that. How are ACOs different from managed care programs, especially HMOs? ACOs are different in the following ways, according to CMS: Medicare beneficiaries keep all of their benefits and rights under traditional Medicare. Beneficiaries can continue to see the physician they choose and do not need to enroll in an ACO. Medicare ACOs are not paid on a capitated basis. Providers and suppliers continue to bill and receive fee-for-service payments from Medicare, rather than receiving lump sum payments based upon the number of assigned beneficiaries. The focus is on achieving savings through better coordination of care and better quality, not through avoiding certain beneficiaries or placing limits on beneficiary access to needed care. If the 33 quality measures don t specifically mention the products or services provided by my department, why should I worry about how ACOs will affect it? The ACO quality measures are broad, so they encompass a wide range of products and procedures which may not be mentioned in the description of the measure. The use of quality measures in reimbursement reflects a vast change in how providers are reimbursed from payment for services to payment for performance which will affect all products and services. ACOs embody a holistic approach to reducing costs and achieving quality that drives behavior across the entire organization. Back to top> 9

10 Have the ACOs produced savings and better quality so far? According to the Centers for Medicare and Medicaid Services, the answer is yes. In January, 2014, CMS reported interim financial results for the 114 Shared-Savings ACOs that began operating in Roughly half (54) reported lower expenditures during their first 12 months in operation than had been projected and 29 generated savings of more than $126 million. 1 In November, 2013, a CMS contractor reported that the Pioneer ACOs saved almost $147 million for Medicare in In July, 2013, CMS also released quality performance information on 32 Pioneer ACOs. Overall, these organizations performed better than fee-for-service Medicare for all 15 clinical quality measures for which comparable data were available. Examples of high quality care cited by CMS included lower readmission rates, as well as better control of blood pressure and cholesterol. 3 1 Press Release: Medicare s Delivery System Reform Initiatives Achieve Significant Savings and Quality Improvements Off to a Strong Start, Centers for Medicare & Medicaid Services, January 30, Evaluation of CMMI Accountable Care Organization Initiatives, L&M Policy Research, November 3, Press Release: Pioneer Accountable Care Organizations Succeed in Improving Care, Lowering Cost, Centers for Medicare & Medicaid Services, July 16, Back to top> 10

11 Commercial ACOs Are commercial ACOs being developed? ACOs are being developed widely by commercial payers, including United Healthcare, Cigna, Aetna, and Blue Cross and Blue Shield. How many ACOs are there among commercial payers? The number of commercial ACOs is hard to determine because there is no standard definition and no central list. Some estimates say there are between 200 and An April, 2014, report suggested about 150, serving 9-16 million patients. 6 Any information about the size or scope of these efforts? Here are some examples: Wellpoint has set up ACOs with 90 health systems and has some 44,000 physicians engaged in shared savings/shared losses arrangements. As of July, 2013, Cigna operated 66 collaborative accountable care initiatives in 26 states, encompassing more than 700,000 customers and more than 27,000 doctors. Its goal is to have 100 accountable care initiatives by 2014, covering one million customers. 7 United Healthcare reported in July, 2013, that it maintained accountable care relationships with more than 575 hospitals, 1,100 medical groups, and 75,000 physicians. About $20 billion of its reimbursement to providers is paid through accountable care type arrangements, and it expects to increase that to $50 billion by Are there different types of commercial ACOs? The nature and structure of commercial ACOs vary widely. Some are structured like Medicare ACOs combinations of hospitals systems, physician practices, and other providers focused on coordinated care. Others may be structured more narrowly built around patient-centered medical homes or centers of excellence, for example. Some payers also establish ACO-like agreements with hospitals and primary care practices that hold providers accountable for successful improvement in patient health and lower costs. 4 ACOs: The State of the Union, Bob Herman, Becker s Hospital Review, May 13, The Accountable Care Paradigm: More than Just Managed Care 2.0, Leavitt Partners, An ACO Update: Accountable Care at a Tipping Point, Oliver Wyman, April, Cigna website, July, 18, United HealthCare press release, United HealthCare Expects to More Than Double Industry-Leading Accountable Care Contracts to $50 Billion by 2017, July 10, 2013 Back to top> 11

12 How are commercial ACOs different from Medicare ACOs? They are largely the same thing though the exact details about payment incentives, savings or losses sharing, and outcome metrics vary greatly. The common thread running through all ACO and ACO-like arrangements, whether in Medicare or on the commercial market, is that some portion of provider reimbursement is linked to performance on cost and quality. Have any results been reported so far by commercial ACOs? The results reported to date have been generally favorable, with reports of reductions in readmissions rates, emergency room visits, length of stays, and costs. Medicare recently reported on the first-year results of its Pioneer ACOs. It found that they produced higher quality and lower Medicare expenditures overall than non-aco providers. Back to top> 12

13 Top Things to Know about ACOs 1. Accountable care organizations (ACOs) are groups of doctors, hospitals, and other providers that join together to provide coordinated, seamless care for patients. 2. ACOs are held accountable for improving the overall health of a patient population even when care is delivered in different settings, at different times, and by different providers. 3. ACOs used coordinated care, electronic health records, and data analysis to squeeze out waste and inefficiency and to encourage wider use of preventive measures, care management, and seamless transitions among care settings, such as from the hospital to the home. 4. ACO reimbursement is linked, in part, to how well providers perform in meeting outcomes and cost benchmarks established by the payer. 5. Payers often share with providers any savings that ACOs achieve, but many payers are also demanding that ACOs share in any losses. 6. ACOs have grown quickly both within Medicare and among commercial insurers, such as Cigna and United HealthCare. 7. Some payers are establishing ACO-type arrangements that hold providers accountable for showing better patient outcomes and lower costs, but don t require formation of a fully integrated ACO. 8. ACOs are virtual organizations, not physical entities. Back to top> 13

14 Resources Philips Materials o Reimbursement Simplified website o State by State Guide on Medicare Accountable Care Organizations CMS Fact Sheets on ACOs o Summary of Final Rule o Providers o Quality o Methodology o Advance Payment ACOs o Rural Providers and ACOs CMS Pioneer ACOs o Fact Sheet o FAQs ACO Quality Measures Final ACO Regulation This document was prepared by Lucy McDonough, Senior Manager, Health Care Economics and Reimbursement North America, Office of Medical and Health Affairs. Back to top> 14

15 Quality Measures for Medicare Accountable Care Organizations Domain Measure Title Measure Detail 1 Patient/Caregiver Experience 2 Patient/Caregiver Experience 3 Patient/Caregiver Experience 4 Patient/Caregiver Experience 5 Patient/Caregiver Experience 6 Patient/Caregiver Experience 7 Patient/Caregiver Experience 8 Care Coordination/ Patient Safety 9 Care Coordination/ Patient Safety 10 Care Coordination/ Patient Safety 11 Care Coordination/ Patient Safety AIM: Better Care for Individuals Getting timely care, appointments, and information National Quality Forum Measure # Survey of outpatient primary care NQF #5 patients, outpatient specialist care patients, and outpatient pediatric care patients Same as above NQF #5 How well your doctors communicate Patients rating of Same as above NQF #5 doctor Access to specialists Same as above NQF #5 Health promotion and education Shared decisionmaking Health status / functional status Risk-standardized, all condition readmission Chronic obstructive pulmonary disease Congestive heart failure Percent of primary care physicians who quality for an EHR incentive program payment Same as above NQF #5 Same as above NQF #5 30-question core survey of adult health plan members that assesses the quality of care and services they receive This measure is used to assess the number of admissions for chronic obstructive pulmonary disease (COPD) per 100,000 population Percent of county population with an admission for heart failure NQF #6 NQF #TBD NQF #275 NQF #277 CMS Measure Back to top> 15

16 12 Care Coordination/ Patient Safety 13 Care Coordination/ Patient Safety Medication reconciliation after discharge from an inpatient facility Screening for fall risk Percentage of patients aged 65 years and older discharged from any inpatient facility (e.g. hospital, skilled nursing facility, or rehabilitation facility) and seen within 60 days following discharge in the office by the physician providing on-going care who had a reconciliation of the discharge medications with the current medication list in the medical record documented This is a clinical process measure that assesses fall prevention in older adults. The measure has three rates: NQF #97 NQF #101 A) Screening for Future Fall Risk: Percentage of patients aged 65 years and older who were screened for fall risk (2 or more falls in the past year or any fall with injury in the past year) at least once within 12 months B) Multifactorial Risk Assessment for Falls: Percentage of patients aged 65 years and older with a history of falls who had a risk assessment for falls completed within 12 months 14 Preventive Health Influenza immunization 15 Preventive Health Pneumococcal vaccination C) Plan of Care to Prevent Future Falls: Percentage of patients aged 65 years and older with a history of falls who had a plan of care for falls documented within 12 months AIM: Better Health for Populations Percentage of patients aged 6 months and older seen for a visit between October 1 and March 31 who received an influenza immunization OR who reported previous receipt of an influenza immunization Percentage of patients 65 years of age and older who ever received a pneumococcal vaccination NQF #41 NQF #43 16 Preventive Health Adult weight Percentage of patients aged 18 years NQF #421 screening and followup and older with a calculated BMI in the past six months or during the current Back to top> 16

17 17 Preventive Health Tobacco use assessment and tobacco cessation intervention visit documented in the medical record AND if the most recent BMI is outside of normal parameters, a follow-up plan is documented within the past six months or during the current visit Normal Parameters: Age 65 years and older BMI > = to 23 and <30 Age years BMI > = to 18.5 and <25 Percentage of patients aged 18 years and older who were screened for tobacco use at least once during the two-year measurement period AND who received cessation counseling intervention if identified as a tobacco user 18 Preventive Health Depression screening Percentage of patients aged 18 years and older screened for clinical depression using a standardized tool and follow up plan documented 19 Preventive Health Colorectal cancer screening 20 Preventive Health Mammography screening The percentage of members years of age who had appropriate screening for colorectal cancer. NQF #28 NQF #418 NQF #34 NQF #31 21 Preventive Health Proportion of adults 18+ who had their blood pressure measured within the preceding two years 22 At Risk Diabetes Hemoglobin A1c control (<8 percent) Rows are a composite measure. A composite measure is a combination of two or more individual measures into a single measure that results in a single score. CMS Measure NQF # At Risk Diabetes Low density lipoprotein (<100) The percentage of adult diabetes patients who have optimally managed modifiable risk factors (A1c, LDL, blood pressure, tobacco non-use and daily Back to top> 17

18 24 At Risk Diabetes 25 At Risk Diabetes 26 At Risk Diabetes Blood pressure <140/90 Tobacco Non Use Aspirin use aspirin usage for patients with diagnosis of ischemic vascular disease) with the intent of preventing or reducing future complications associated with poorly managed diabetes. Patients ages with a diagnosis of diabetes, who meet all the numerator targets of this composite measure: A1c < 8.0, LDL < 100, Blood Pressure < 140/90, Tobacco non-user and for patients with diagnosis of ischemic vascular disease daily aspirin use unless contraindicated. 27 At Risk Diabetes 28 At Risk Hypertension 29 At Risk Ischemic Vascular Disease Hemoglobin A1c poor control (>9 percent) Blood pressure control Complete lipid profile and LDL control <100 mg/dl The percentage of members years of age with diabetes (type 1 and type 2) whose most recent HbA1c level during the measurement year was greater than 9.0% (poor control) or was missing a result, or if an HbA1c test was not done during the measurement year The percentage of patients 18 to 85 years of age who had a diagnosis of hypertension (HTN) and whose blood pressure (BP) was adequately controlled (<140/90) during the measurement year The percentage of patients 18 years of age and older who were discharged alive for acute myocardial infarction (AMI), coronary artery bypass graft (CABG) or percutaneous coronary interventions (PCI) during the first 10 months of the year prior to the measurement year, or who had a diagnosis of ischemic vascular disease (IVD) during the measurement year and the year prior to measurement year, who had each of the following during the measurement year. NQF #59 NQF #18 NQF #75 - Complete Lipid Profile - LDL-C control <100 mg/dl Back to top> 18

19 30 At Risk Ischemic Vascular Disease Use of Aspirin or Another Antithrombotic The percentage of patients 18 years of age and older who were discharged alive for acute myocardial infarction (AMI), coronary artery bypass graft (CABG) or percutaneous coronary interventions (PCI) during the first 10 months of the year prior to the measurement year, or who had a diagnosis of ischemic vascular disease (IVD) during the measurement year and the year prior to the measurement year and who had the following during the measurement year: NQF #68 31 At Risk Heart Failure 32 At Risk Coronary Artery Disease 33 At Risk Coronary Artery Disease Beta- Blocker Therapy for Left Ventricular Systolic Dysfunction (LVSD) Drug Therapy for Lowering LDL Cholesterol Angiotensin- Converting Enzyme (ACE) Inhibitor or Angiotensin Receptor Blocker (ARB) Therapy for Patients with CAD and Diabetes and/or Left Ventricular Systolic Dysfunction (LVSD) -Use of aspirin or another antithrombotic Percentage of patients aged 18 years and older with a diagnosis of heart failure with a current or prior LVEF < 40% who were prescribed beta-blocker therapy either within a 12 month period when seen in the outpatient setting or at hospital discharge Percentage of patients aged 18 years and older with a diagnosis of coronary artery disease seen within a 12 month period who have a LDL-C result <100 mg/dl OR patients who have a LDL-C result >=100 mg/dl and have a documented plan of care to achieve LDL-C <100mg/dL, including at a minimum the prescription of a statin Percentage of patients aged 18 years and older with a diagnosis of coronary artery disease seen within a 12 month period who also have diabetes or a current or prior LVEF <40% who were prescribed ACE inhibitor or ARB therapy NQF #83 NQF #74 NQF #66 Back to top> 19

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