Accountable Care Organizations Implications for Physician Compensation

Transcription

1 Accountable Care Organizations Implications for Physician Compensation Accountable Care Organizations (ACOs) are anticipated to play a significant role in the future landscape of healthcare. It is important to understand what their existence may mean in regards to the direction of impending cost containment strategies. More pertinent to INTEGRATED, is the impact these ACOs may have on the future of physician incentives and compensation. This paper is intended to share an investigation and findings with you, in the hope that it provides you with some additional insights and considerations about ACOs. Background An ACO is defined by the Centers for Medicare and Medicaid Services (CMS) as: groups of doctors, hospitals, and other health care providers, who come together voluntarily to give coordinated high quality care to their Medicare patients. The goal of coordinated care is to ensure that patients, especially the chronically ill, get the right care at the right time, while avoiding unnecessary duplication of services and preventing medical errors. When an ACO succeeds in both delivering high-quality care and spending health care dollars more wisely, it will share in the savings it achieves for the Medicare program. (Centers for Medicare and Medicaid Services, 2014). The concept of a provider and a payer sharing in healthcare savings is nothing new. In one context or another, Health Maintenance Organizations (HMOs) have relied on this concept since at least the 1980s. The most recent adaptation however, began to take its current shape between with a federal demonstration project called the Medicare Physician Group Practice Demonstration, which focused on physician groups serving dual eligible Medicare and Medicaid patients and tied bonus payments directly to patient care quality and cost reduction metrics. The results of the demonstration projects were an average of 4-5% cost reduction per person to CMS (Colla, 2012), which served as the catalyst for the inclusion of an ACO program into the structure of the Patient Protection and Affordable Care Act of 2010 (PPACA). Implementation The ACO framework laid out by the PPACA commenced with two pilot programs based upon the fundamental difference in risk assumption between the payer and provider. The first pilot, called the Medicare Shared Saving Program (MSSP), is a one-sided shared savings program that financially rewards providers with a percentage of the savings Page 1

2 that are generated with the implementation of the ACO program, without assuming any of the financial risk if losses are incurred. Without assuming risk, the provider s potential financial yield in the MSSP program is capped at a lower rate. The second pilot, called the Pioneer ACO Program, is a shared risk program in which the provider becomes financially liable for incurred losses but also enjoys a greater share of the financial reward in any accrued savings. ACO participants must have a minimum of 5,000 enrolled (assigned) beneficiaries (Gold, 2014), primarily to dampen the spikes in average weighted cost from acute catastrophic episodes. Savings are determined by performance and quality metrics in as many as 33 different categorical parameters in an undisclosed mathematical algorithm. Minimum Savings Rate thresholds exist within the framework of the agreement to safeguard the payer and are applicable under both programs before any savings are divided and redistributed. Minimum Savings Rates for the shared risk Pioneer program are 2% and Minimum Savings Rates in the risk-free MSSP program balloon to 3.9% (Bailit & Hughes, 2011). The commencement of the MSSP program had 114 participants. Of these, 54 were able to keep costs below their budget benchmark, but only 29 were able to hold down costs enough to qualify for shared savings. These successful ACOs received $126 million in savings, while the CMS trust fund realized savings of $128 million, around 1 percent of costs. The other 60 MSSP ACOs experienced spending above their set benchmark. (McClellan & White, 2014). The commencement of the Pioneer program had 32 participants, generating $147 million in total savings, with approximately $76 million in savings returned to the ACOs and $69 million returned to Medicare, around 2% of costs. Of the original 32 Pioneer ACOs, 12 qualified for shared savings, one shared in losses, and 19 did not share in savings or losses. (McClellan & White, 2014). Both of these CMS ACO programs continue to operate under their inaugural contracts, which commenced with the ratification of the PPACA phase 2 on January 1, 2014 and will conclude on December 31, Private Sector Interest The opportunity to reap financial reward has of course, attracted the interest of the private sector. Privately contracted ACO models are subsequently becoming commonplace in the healthcare market between private insurers and providers. Preliminary (and cursory) data indicates that a properly equipped and integrated health provider network is capable of generating considerable savings under this model, thereby reaping significant financial reward. Subsequently, the market curiosity in private sector ACO models is drawing favorable interest - even though many potential Page 2

3 players are taking somewhat of a wait-and-see approach as the preliminary CMS model experiment plays out through the end of 2016 (Muhlestein, 2013). Because of the scope of health management integration necessary to accrue tangible savings (and thereby justify the existence of the program), it is unlikely, if not impossible, for small physician groups to participate in ACOs without assimilating into larger health networks. ACO critics warn that this may encourage more healthcare mergers and takeovers, whereas proponents argue that mergers and takeovers are already commonplace despite the inclusion of the ACO model. One of the primary obstacles for small physician groups in joining or becoming an ACO is the tremendous startup cost for creating or upgrading a distributed system of information management that integrates electronic medical records into electronic health records, utilizing a universal system nomenclature that allows for more efficient processing and communication between different types of healthcare specialties and entities. The PPACA contains language that provides financial assistance for rural and/or destitute healthcare networks in order to upgrade their infrastructure for the ACO transition. However, there is no precedence for what will happen to these networks if they default on their federal loans in the event of implementation failure, administrative gridlock, or both. Plausible Speculations Since ACO s assume additional administrative burden, it would be reasonable to assume that some of the pioneer programs were initially unsuccessful due to the time and monetary constraints associated with the considerable operational, procedural, and information management restructuring necessary to accommodate the expedited delivery systems. It would also be reasonable to assume that these dramatic and necessary changes in health network operations could create enough inefficiency per se to push a new ACO participant into the minimum savings rate of the payer, yielding little or no shared savings for the first year. Again, large provider networks are in an advantageous position in this regard with a higher likelihood of operational stability and infrastructure, along with the managerial time and talent that is available to them in execution. It will be interesting to see if the next few years of data will showcase a financial savings swing as participating ACO health networks iron out their own internal operational kinks within the framework of the system. Despite what appears to be an obvious attempt to withhold actual dollar values from public view, total savings figures are available for the CMS ACO pioneer groups as a whole. The individual success of each participating provider is obscured, along with how these savings returns were apportioned between physician incentive and net income to the organization for the administration of the program. Physicians may be compensated for their efforts up to their fair market value (FMV). But, it is unclear how Page 3

4 the distribution of these ACO savings will impact FMV for the total cash compensation of physicians, or how these rewards will be interpreted in the context of Anti-kickback Statutes. The Stark Law s Group Practice Exception provides leeway in self-serving physician referrals within provider networks, but loosely cobbled together ACOs may not qualify for this protection by definition in the private sector. Switching to an ACO model changes the landscape of physician compensation incentives by initially delaying payouts for up to 15 months. Meaning, care quality metrics would take an entire fiscal or calendar year to accrue, then as much as another quarter to interpret, reconcile, and payout these earned incentive amounts. At first, these incentive payments are likely to represent a relatively small percentage of a provider s compensation package. As ACO and other performance-based programs grow and mature, we could safely speculate that a physician would only earn their base draw or some portion of his or her total cash compensation during the operating year only to wait for the rest of their compensation once incentives are determined. This would act as a catalyst for significant pushback against an ACO implementation by employed physicians. It is reasonable to expect that providers could be asked to work harder for the same or less initial compensation, with the anticipation of incentive payouts at the end of a year. Providers will be very unhappy and demoralized if after working harder, incentive payouts do not materialize. Dissatisfaction over pay v. working conditions could potentially raise the appeal of organized labor. Conclusion Public and private sector ACOs will continue to change and develop for years to come. The CMS sponsored programs will continue at least until the end of Regardless of whether or not the program is renewed on a federal level, it is inevitable that the ACO concept will continue to perpetuate in the private sector in some form or another. Now that the financial precedence exists, the ability to generate savings through efficiency in infrastructure will certainly remain a viable option for any private business model. This carrot-and-stick approach to shared savings is a powerful negotiating tool between payers and providers because of its ability to create a mutually beneficial financial relationship. As physician incentive and compensation consultants, we must carefully consider the ramifications of these programs in what we do. Page 4

5 References Bailit, M., & Hughes, C. (2011). Key Design Elements of Shared Savings Payment Arrangements. The Commonwealth Fund, Centers for Medicare and Medicaid Services. (2014, July 11). Accountable Care Organizations. Retrieved from cms.gov: Colla, C. H. (2012, September 12). Spending Differences Associated with The Medicare Physician Group Practice Demonstration. Retrieved from The Journal of the American Medical Association: Gold, J. (2014, April 16). FAQ On ACOs: Accountable Care Organizations, Explained. Retrieved from Kaiser Health News: McClellan, M., & White, R. (2014). Issue Brief: How to Improve the Medicare Accountable Care Organization (ACO) Program. Engelberg Center for Health Care Reform at Brookings, Muhlestein, D. (2013, October 31). Why Has ACO Growth Slowed? Retrieved from Health Affairs: Page 5

6 August 2011 Issue Brief Key Design Elements of Shared- Savings Payment Arrangements Michael Bailit and Christine Hughes Bailit Health Purchasing, LLC The mission of The Commonwealth Fund is to promote a high performance health care system. The Fund carries out this mandate by supporting independent research on health care issues and making grants to improve health care practice and policy. Support for this research was provided by The Commonwealth Fund. The views presented here are those of the authors and not necessarily those of The Commonwealth Fund or its directors, officers, or staff. ABSTRACT: Shared savings is a payment strategy that offers incentives for providers to reduce health care spending for a defined patient population by offering them a percentage of net savings realized as a result of their efforts. The concept has attracted great interest, in part fueled by Affordable Care Act provisions that create accountable care organizations and by the movement among medical home pilots to make payment methodologies more performance-based. In this issue brief, the authors interviewed payer and provider organizations and state agencies involved in shared-savings arrangements about their diverse approaches, including the populations and services covered, the assignment of providers, the use of risk adjustment, and the way savings are calculated and distributed. The authors identified issues payers and providers must resolve going forward, including determining whether savings were achieved, equipping providers with necessary tools and technical advice, agreeing upon standard performance measures, and refining the model over time. For more information about this study, please contact: Michael Bailit, M.B.A. Bailit Health Purchasing, LLC [email protected] To learn more about new publications when they become available, visit the Fund's Web site and register to receive alerts. Commonwealth Fund pub Vol. 20 OVERVIEW Shared savings is a payment strategy that offers incentives for provider entities to reduce health care spending for a defined patient population by offering them a percentage of any net savings realized as a result of their efforts. Shared savings can be applied to some or all of the services that are expected to be used by a patient population. The concept has attracted great interest in 2011, in part fueled by provisions within the Patient Protection and Affordable Care Act that create accountable care organizations (ACOs). Specifically, the creation of the Medicare Shared Savings Program for ACOs, beginning in 2012, calls for shared savings as a primary payment methodology. This prompted frenzied activity among many providers to position themselves to become ACOs even before the draft rules for the program were released. Such provider organizations have taken steps to negotiate and implement sharedsavings contracts with commercial insurers.

7 2 the Commonwealth Fund Added interest in shared savings comes from the movement among medical home pilots to make payment methodologies more performance-based. A few early pilots have employed shared-savings approaches and others are developing or implementing plans to do so. 1 Shared savings is not a wholly new reimbursement model. While it has not been widely used, there are existing examples of the concept in operation that predate the Affordable Care Act. Examining the characteristics of these models may increase understanding regarding how best to structure shared-savings arrangements and the decisions faced in constructing them. In this issue brief, Bailit Health Purchasing conducted 32 telephone interviews with payer and provider organizations and state agencies that indicated they were involved in independent past, current, and planned shared-savings payment arrangements. The 27 assessed shared-savings programs were primarily applied in primary care practice medical home programs and in ACO-like payment arrangements involving a more broadly defined provider organization. Approximately one-third of the arrangements were formed through medical home or medical home-like programs. The medical home and ACO-like sharedsavings models did not differ considerably in construction beyond medical home programs providing supplemental PMPM payments and ACO-like programs that did not. Approximately two-thirds of the arrangements were implemented in 2010 or There are a few key issues which payers and providers must resolve as they design and implement shared-savings payments models. First, they must agree on how to determine whether savings were achieved so that there is both a meaningful incentive for the provider and reasonable protection that calculated savings do not reflect random variation in health care costs. This balance is difficult to achieve, especially in the case of smaller provider organizations. Second, providers need tools to succeed if they are to transform care delivery. Payers can help provide some of these tools, including timely, trended performance data with targets and benchmarks, and giving practices the ability to manipulate such data. They can also provide technical advice regarding knowledge and implementation of systems and processes to deliver better care more efficiently. In particular, smaller provider organizations may need additional assistance, as well as those that are not in robust financial health. Third, while testing the application of varied performance measures across payers may be of value in the near term, competing sets of performance measures in shared-savings methodologies could eventually harm the effectiveness of the payment models, as providers will find it difficult to focus. There may be opportunities for regional coalitions to identify a common framework with which nonfederal payers might align. Finally, national expectations are high that payment and delivery system reform will finally slow the inexorable march of health care cost growth. It will be necessary to learn within and across both payer and provider organizations from the successes and failures and to maintain a resolve to persistently refine the shared-savings payment model to maximize effectiveness. PATIENTS, SERVICES, AND PAYMENTS IN SHARED-SAVINGS MODELS Which patient populations are included in shared-savings models? Shared-savings arrangements vary in terms of included patient populations, depending on whether the arrangements are applied in medical home models or ACO-like models. Medical homes tend to include fully insured commercial populations in single-payer models, and fully insured commercial populations and Medicaid managed care populations in multipayer initiatives. Patients covered by self-insured employers are included under some arrangements but not others. This is because of the varying policy positions taken by third-party administrators regarding charging selfinsured employers the supplemental per member per month (PMPM) payments usually made to practices under medical home pilots. Specifically, some administrators believe their administrative agreements with

8 Key Design Elements of Shared-Savings Payment Arrangements 3 self-insuring employers allow for supplemental payments to medical homes while others do not. In cases where the supplemental payments are not considered permitted under the administrative services agreement, some third-party administrators will ask self-inured employers to opt-in to such payments, some will invite employers to opt out, and others will not broach the subject with their self-insured employers. Finally, some administrators will treat different classes of self-insuring employers differently. ACO-like shared-savings models, which do not routinely provide PMPM supplemental payments, are much more likely to include patients covered under self-insured employer contracts. These ACO-like shared-savings models are applied to a variety of different patient populations, most often including the following: only commercially insured and self-insured; only Medicare Advantage; commercially insured, self-insured, and Medicare Advantage, and traditional Medicare and/or Medicare/ Medicaid dual eligibles (in the context of CMS federal demonstrations). In some cases the payer begins the sharedsavings program with one patient population and then expands to other patient populations in future years. Medicaid populations were rarely involved in the ACO-like shared-savings models, but were involved in medical home shared-savings models. Finally, pediatric populations are excluded in some instances. This can be because of payer concern that the opportunities for savings, particularly in commercially insured populations, are not great due to the generally good health status of children. How are providers assigned responsibility for the patient population for which savings are calculated? For patients enrolled in a PPO product or in traditional Medicare, the patient population in almost all instances is defined by the use of a patient-attribution methodology that examines historical utilization patterns and attributes the patient to the provider entity with which the patient has the best-established care pattern. The pattern is typically assigned by determining with which practices the patient had the most primary care visits, or primary and specialty visit, for specified evaluation and management codes in the past 12, 18, or 24 months. In some cases, consideration is also given to the most recent visits, particularly in the event of a tie in the number of visits. The attribution is performed by the payer using the claim data. For patients enrolled in an HMO product, the responsible provider is the provider entity with which the patient s selected primary care clinician is affiliated. On occasion, shared-savings models will assess performance only for those patients who were continuously enrolled for 11 or 12 months of the year. What services are included in the sharedsavings calculation? Most of the studied shared-savings programs assess savings relative to the full set of covered services for the patient population. These services vary depending upon the payer and the line of business; for example, commercial plan, Medicare Advantage, traditional Medicare, and Medicaid. There are programs that exclude certain services, however. Examples of excluded services include: organ transplants; prescription medications; behavioral health; pediatric services; dental services, except for limited services covered by health care coverage premium payments; out-of-area services; and nonpreventable inpatient and emergency department services. 2 In some cases services are excluded because self-insured employers will carve services out to a specialty vendor (e.g., pharmacy), making the sharedsavings calculation more challenging to perform because the benefit is administered by the insurer for some members and not others. One carrier interviewed for this study described a method to adjust for such carve-outs.

9 4 the Commonwealth Fund In multipayer medical home arrangements that utilize multipayer claims databases, limitations to databases can potentially limit the services that are included. For example, Maryland s multipayer database does not always contain pharmacy claim information. What payments are excluded from the sharedsavings calculation? In addition to excluding certain patient populations and services, shared-savings arrangements commonly exclude certain types of payments. Such payments include the following categories: Non service-related payments. Shared-savings arrangements will exclude consideration of payments that do not relate to the direct provision of services, including: performance incentive payments, such as payfor-performance bonuses; management fees; vendor-capitated payments (e.g., behavioral health, laboratory); and risk-contract settlements (including prior year shared-savings payments). High-cost outliers. Shared-savings arrangements commonly remove costs related to patients with very high costs during the measurement period, which is typically 12 months. This is done by truncating the high-cost patients. The payer and provider entities define an annual per-patient expenditure level above which any medical expense will be either fully or partially excluded from the shared-savings calculation. The dollar level at which patient-specific medical expense is truncated varies considerably. In most cases it is defined as a flat dollar amount, with an observed range of $50,000 per year to $500,000 per year. The most commonly reported truncation points were between $100,000 per year and $200,000 per year. Medical home model truncation points tend to be somewhat lower than those of the ACO-like arrangements. While the flat dollar truncation approach is most common, there are other approaches to addressing high-cost patient outliers, including: making no adjustment; defining the truncation point in terms of standard deviation from the mean per patient annual medical expense, such as two and three standard deviation truncation points; varying the truncation point by patient population (e.g., commercially insured vs. Medicare Advantage) due to different patterns in spending by population; applying some percentage medical expense above the truncation point to the shared-saving calculation in order to motivate the provider to continue to engage in care management after the patient exceeds the threshold; and truncating based on utilization measures rather than cost measures (e.g., costs associated with inpatient stays in excess of 20 days). In cases in which high-cost medical expenses are truncated, the payer either removes the value of those claims from the target being used for savings calculation or the payer charges back the cost of reinsuring the provider for purposes of shared-savings calculations. Finally, on rare occasions, low-cost outliers are also excluded for the savings calculation. The implication of this practice on savings determinations is unclear. How are supplemental payments and vendorcapitated payments treated in shared-savings calculations? Supplemental PMPM payments are common in medical home payment models. These payments are typically netted out as expenses in shared-saving calculations. Vendor-capitated payments for services such as behavioral health or laboratory services are treated in one of two ways. The payments and associated

10 Key Design Elements of Shared-Savings Payment Arrangements 5 services may be excluded altogether from the calculation. Alternatively, encounter data submitted by the capitated vendor can be priced per unit of service and included in the calculations. SPECIAL ADJUSTMENTS TO SHARED-SAVINGS CALCULATIONS Do shared-savings calculations involve risk adjustment? Only about half of the studied models employed risk adjustment, with a few contemplating risk adjustment in the future. Those models that do employ risk adjustment use four different models: the Center for Medicare and Medicaid Services (CMS) hierarchical condition categories methodology; the Prometheus payment methodology; or one of two leading commercial risk-adjustment software packages, the Johns Hopkins adjusted clinical groups case-mix system and the Verisk Health Sightlines DxCG risk solutions product. Models electing not to use risk adjustment were more likely to be medical home initiatives or believed that risk adjustment was not imperative because the shared-savings model involved comparing the provider s performance to its own past performance, with an assumption that the patient population risk burden would not vary much from year to year. What in-kind or other supports do payers supply providers operating under shared-savings arrangements, and how are these treated in the calculation of savings? Payers vary considerably in their approaches to supporting providers operating under shared-savings arrangements. In the vast majority of cases, support is provided at no cost to providers. Only two payers interviewed for this study reported they charged providers for support. The value of the support was never reported to be netted out of any savings. The primary form of payer support is the provision of reports and data, including: claim files for provider manipulation and analysis; these are most commonly desired by large provider organizations with the resources to maintain a sophisticated internal analytic function and that are seeking an alternative to multiple independent reports from different payers; access to a payer database with software tools that provide standard reports and allow for customized inquiries; a suite of patient attribution, utilization, cost reports, made available most often through a payer s Web portal; and ad hoc analyses at the provider organization s request. In several instances payers provide by consultation physicians, nurses, or other payer staff to providers on the interpretation and applied use of data and reports. Assistance and consultation in delivery system redesign and practice transformation is less common and takes the following forms: learning collaborative or primary care practice coaching, primarily in medical home initiatives; care management training, both practice-based and inpatient; roundtables and forums for provider organizations to exchanges ideas and best practice; and hospital admission and emergency department notification. ACHIEVING ACCEPTABLE CONFIDENCE IN SAVINGS CALCULATIONS What is the minimum size of a provider s panel of patients to participate in the shared-savings arrangement? Shared-savings arrangements vary significantly in terms of the minimum number of patients for whom a provider must care. While some studied models set no patient population minimum, either because they purposely elected not to or, more often, because they

11 6 the Commonwealth Fund involve very large provider organizations only, minimum patient populations are often required to ensure that savings calculations can capture savings with some degree of confidence of accuracy. Payers can be reluctant to enter into a payment model in which they may make additional provider payments that are not real, that is, they may be the result of random variation. This is especially true because shared-savings arrangements by definition pose no downside risk to the participating providers. While adjustment for highcost outliers removes some degree of random variation in health care costs, it does not adjust for it all. Also, this high-cost outlier adjustment provides some protection to providers, but does not address the source of greatest concern to some payers paying bonuses for random variation that produces low costs. This issue is relevant for both ACO-like and medical home shared-savings arrangements, although sometimes more challenging for the latter because the participating provider entities have tended to be smaller. For commercially insured populations, required minimum patient populations varied from 1,000 to 10,000. For Medicare patient populations (traditional Medicare and Medicare Advantage), the required minimum patient populations ranged from 333 to 5,000. The latter figure is the minimum proposed by CMS for the Medicare Shared Savings Program. In one case, the thresholds were defined for the total provider patient population and savings calculated for all participating payers for commercial, Medicare Advantage, and Medicaid managed care. Shared-savings methodologies that are service-focused rather than population-focused, such as Prometheus Payment and the Medicare Acute Care Episode Demonstration also set minimum thresholds. In the latter case the threshold was set for providers to qualify for the demonstration. The variation in approaches to setting minimum population sizes is a result of differences of opinion among actuaries and statisticians and differences in business strategy by payer executives in three key areas: the level of statistical certainty produced by different population sizes; the risk tolerance of payers relative to different levels of certainty and uncertainty; and the relative priorities set by a payer when considering goals relative to statistical delivery. One interviewee observed, The fundamental question is whether the main purpose of shared savings is to incentivize the practices to change or to accurately reward practices for their efforts. Another interviewee commented that at his health plan s minimum threshold there was still much practice cost volatility, and he knew that his actuaries would have preferred a much higher number than that which the insurer adopted. If he had done what the actuaries wanted, there would not be many groups with shared-savings arrangements. Designers of shared-savings models face important trade-offs, especially if they want to apply shared-savings models to smaller provider entities or to provider entities with which a given payer may have coverage responsibility for a relatively small percentage of the provider s patients. How else do payers protect themselves against paying for savings that may not be real? In some instances, payers have taken an additional risk protection step beyond minimum patient population thresholds. This involves the payer retaining some percentage of initial savings before sharing any additional savings with the provider. In the CMS Physician Group Practice Demonstration, if savings were 2 percent or less of the value of the estimated budget, CMS would make no bonus payments. Practices would only begin to share savings above that level and then up to a maximum of 5 percent. This type of cap is a component that generally was not found in commercial payer models. In two other models the retained percentage before sharing savings was 2 percent; in a third model, it was 5 percent; and in a fourth model, the participants would not disclose the percentage.

12 Key Design Elements of Shared-Savings Payment Arrangements 7 For the Medicare Shared Savings Program, CMS proposes to set a minimum savings rate (MSR) that an ACO must exceed to share in savings. The MSR is defined by both the number of assigned beneficiaries and a CMS-chosen confidence interval. The percentage of savings that must be realized before any are shared with the provider are still far greater for smaller ACOs than for larger ACOs. For example, an ACO with 5,000 Medicare beneficiaries would need to save at least 3.9 percent before any savings would be shared, while an ACO with 60,000 Medicare beneficiaries would be required to save at least 2 percent before any savings were shared. This contrasts with the majority of commercial payer models that have no minimum savings rate or utilize a flat percentage. CMS requires that the savings exceed the MSR before savings are shared, but it will then share savings after the first 2 percent. There are exceptional circumstances not found in any of the other studied models when the 2 percent requirement is waived. 3 In some models there is purposely no payerretained savings because the savings are calculated for a service, rather than for a population. In these cases the payment rate for a specific service was discounted up front so that the payer automatically sees some savings prospectively. What strategies have been adopted for providers that fall below the minimum patient volume thresholds? The shared-savings cases in this study typically followed one of three courses of action with regard to the involvement of smaller provider entities in shared-savings arrangements when minimum population thresholds were not met. 1. Most commonly, the payers would exclude from eligibility those providers whose patient population fell below the payer s established threshold, although in a few instances exceptions were made. 2. In some cases payers combined small-provider entities into a pool with other providers to meet the threshold. Should the pool of providers earn savings, the savings are then be allocated across those providers that composed the group. 3. In a couple of instances, pooling was done for all participating providers. Providers tend to argue against pooling or aggregating, as it results in a perceived loss of control and motivation. Some argue that pooling of all participating providers so dramatically reduces control that it is inconsistent with common understanding of shared savings. Providers appear to only support pooling if it is done across entities that have a preexisting contractual or organizational relationship. In instances when pooling occurs, there are questions about how it is structured. Options include pooling providers by geographic proximity, organizational type, providers primary specialty (for medical homes), patient mix, and baseline performance. CALCULATING SAVINGS How does the model determine if savings were achieved? A basic question for any shared-savings model is the method for determining whether the provider s efforts achieved any savings. Savings are typically assessed for a 12-month measurement period. Models typically assess savings in two ways: Comparison of provider-associated cost to a budget or target. Under this arrangement, the payer considers the past costs associated with the provision of care to the provider-attributed patient population and projects forward future costs. Such forecasting may take into account projected general medical trends, changes in benefit plan design, and planned cost containment strategies to be implemented by the payer. The cost budget can be subject to negotiation, with one payer comparing the process to a rugby match. Approximately two-thirds of the studied models use a budget or target approach. In at least one instance the target was informed by looking at best

13 8 the Commonwealth Fund practice in the region and using those data, in part, to set the target. The proposed Medicare Shared Savings Program uses a target or benchmark approach. As stated in CMS materials, CMS would... develop a benchmark for each ACO against which ACO performance is measured to assess whether it qualifies to receive shared savings.... The benchmark is an estimate of what the total Medicare fee-for-service Parts A and B expenditures for ACO beneficiaries would otherwise have been in the absence of the ACO. 4 CMS proposes setting its benchmark based on claims data from the previous three years for beneficiaries who would have been assigned to the ACO, with the most recent years weighted most heavily and adjustments made to account for the increase in national Medicare fee-forservices expenditures. Comparison to a control group. In some cases the rate of change in the PMPM costs of patients attributed to a provider are compared with those of either a select comparison group or to the payer s full regional provider network (otherwise known as book of business ), with the provider included or excluded from the book-of-business calculation. If the provider s trend rate falls below that of the control group, the difference in trend rates is used to calculate the amount of the savings. In some cases the control group is negotiated and in other cases it is defined by the payer. There are some additional variations with regard to the implementation of these two approaches: Savings can be calculated by comparing the PMPM costs of patients attributed to a provider to the prior year experience, without any comparison to a control group. Both the budget and the control group trend comparison can be calculated using a subset of services rather than something approximating or equally total medical expense. For example, the model can consider only expenses related to inpatient hospital use and emergency department service use, since these two areas are usually considered to be two primary sources of savings. It can also consider trend rates for only patients with chronic conditions for whom cost savings opportunities may be greatest. Those who support the budget approach say that its strength is allowing providers to know what needs to be achieved. Its detractors note the perilous nature of forecasting medical trends for purposes of establishing a budget, noting the impact of unanticipated events such as flu epidemics and sudden changes in the economy. Those who support the control group approach note that it protects against external factors that significantly drive medical expense trends and uses real, rather than projected, figures to assess savings. Its detractors observe that control groups are not always easily defined (and will become less so as payment reform expands) and that the computations to ensure true comparability including possible adjustments for case mix, changes in product mix, provider contract rates, and geographic factors can be complex. DISTRIBUTING SAVINGS For what percentage of savings are providers eligible? Shared-savings models take many different approaches toward allocating savings between the provider and the payer. For multiprovider entities, there are further metrics for allocation of savings among the providers. The most common distribution of provider and payer net savings is 50 percent to the provider and 50 percent to the payer. 5 As discussed further below, in many cases the provider percentage is contingent on acceptable or strong performance on a set of measures. While a 50/50 split arrangement is most common, there are many other approaches, including: the provider earning more than 50 percent, with percentages rising to 65 percent and even 80 percent; the precise provider share can be determined by the provider s nonfinancial performance using a set of measures, with the distribution

14 Key Design Elements of Shared-Savings Payment Arrangements 9 of savings scaled from 0, 20 percent, or 40 percent. providers can earn a flat percentage, but the total dollars shared can be capped; for example, in one arrangement the payer shares savings up to 6 percent after an initial 2 percent payer retention. With a 50/50 split, the most the provider can earn is 3 percent of the budget amount; and in the Prometheus Payment model, the payer takes its savings out of the bundled payment and then the provider earns whatever savings it can generate from the discounted payment. As is the case with other shared saving design elements, the percentage of savings for which each party is eligible is often subject to negotiation. Are the size of provider savings payments contingent on considerations other than savings achievement? Almost every observed shared-savings model uses performance on access, patient experience, quality, and/or service utilization to determine the percentage of savings the provider will receive. The measures most often tend to address preventive and chronic care services, and for ACO-like entities, acute care services. Gates and ladders. In some models, performance measures serve to define a minimum qualification or gate. If the provider meets the minimum performance requirement, it is entitled to a fixed percentage of savings. Other models are more complex. They define a gate, but also specify that the provider can increase its savings beyond that amount by performing better relative to a performance measurement set and moving up a ladder. In such instances, the percentage of savings eligible for meeting the minimum standards that is, passing through the gate is typically less than 50 percent. The proposed Medicare Shared-Savings model may be the most complex example of this latter approach, with 65 measures spread over five performance domains, and providers expelled from the program for not meeting minimum performance standards for one domain for two years. Each measure within a domain is worth a maximum of two points and a minimum of zero points, with points assigned based on performance relative to national Medicare fee-for-service and Medicare Advantage percentiles. An ACO would get a single score for the domain based on the percentage of total points achieved. The average of the five domain scores would be the overall score, which would determine the percentage of the shared savings an ACO receives. 6 The Medicare Shared Savings Program design does not include, although it is common in other models, the use of utilization measures. These measures typically assess the extent to which the provider is reducing preventable acute care service use including inpatient readmissions, potentially avoidable inpatient admissions, and potentially avoidable emergency department visits. The use of utilization measures has been a topic of debate. The measures can be viewed as both quality measures but also as indicators of efficiency and cost savings. Some have argued that their inclusion represents a redundant incentive because, even without these measures, the provider will seek to achieve savings through reduced need for and delivery of these services. Still, some payers insist on their inclusion because of the perceived imperative for the payers to reduce costs associated with utilization of these services. In one model, quality measures were employed as the qualifying gate, while utilization measures determined the percentage of savings earned above the gate. In other cases, quality, utilization, and other measures are not differentiated for purposes of evaluating performance and determining the percentage of distributed savings. Overall, preventive care, chronic illness care (process measures and interim outcome measures), and utilization (efficiency) measures were all employed with approximately equal frequency in the studied models, while access and patient experience each appeared to be used about a third less often. Benchmarks vs. improvement. Shared-savings models that use performance measures to determine

15 10 the Commonwealth Fund provider savings allocation tend to use three basic approaches. The first involves scoring provider performance relative to a benchmark. Examples include regional Healthcare Effectiveness Data and Information Set (HEDIS) percentiles and payer-defined percentiles, as in the CMS Shared Savings Program. As providers meet or exceed higher benchmarks for each measure or composite measure, they earn more points, which translate into a larger share of savings. The second approach assesses the extent to which provider performance has improved compared with the prior year. Some models require the improvement to be statistically significant while others do not. The third approach is to consider both performance toward benchmarks and performance improvement. One such example is to require annual improvement until such time that the provider reaches a high external benchmark, at which point the provider must only maintain performance at or above the benchmark year-over-year. As with most every element of shared-savings model design, there are many variations in the application of the above approaches, including the following: the percentage of savings that is contingent on selected performance measures increases over a five-year phase-in period; either reporting measures or maintaining performance is required in the first year, while performance improvement is required in the years that follow; quality cannot be a consideration in a sharedsavings distribution and the payer can operate a separate but parallel quality incentive pool; and quality scores can be combined into a composite measure for assessment purposes to respond to the problem of small observation counts for small provider entities. THE FUTURE FOR SHARED-SAVINGS MODELS Are shared-savings methodologies considered long-term or transitional payment strategies? Many provider and payer participants view shared-savings payment methodologies as transitional, but with an undefined timeframe. Most providers and payers view their recent forays into shared savings as a learning experience and do not presume to know when they will want or be ready to transition to a risk-based payment arrangement with a combination of downside risk and greater upside risk. This approach stands in contrast with the proposed CMS Shared Savings Program, which requires that ACOs transition to a reciprocal upside and downside shared-risk model after two years. A significant number of shared-savings participants see the model as a long-term strategy, albeit with adjustments over time. At least one payer felt that payment arrangements with downside provider risk would never be viable for smaller provider entities. CRITICAL ISSUES IN SHARED-SAVINGS DESIGN AND IMPLEMENTATION This analysis has revealed a considerable amount of activity in the design and implementation of sharedsavings payment models. It seems likely that additional outreach efforts would have yielded many more varied examples. The current flurry of activity is sparking creativity and the opportunity to try different approaches. This natural experimentation will facilitate learning, as not all efforts are likely to be equally effective. The trade-off for this experimentation will be the variety of models and performance measures that providers will face and the difficulty for providers trying to respond to disparate incentives. It is difficult to know what will be the determining success factors for shared-savings payment models, but there are a few critical issues to address and resolve.

16 Key Design Elements of Shared-Savings Payment Arrangements 11 Determining if Savings Have Been Achieved Very few interviewees identified this issue as central, but it appears it will be an increasing source of conflict. For those who spoke about it, the topic was the basis for extensive research, analysis, and negotiation. Unless shared-savings programs are implemented only with the very largest of provider organizations and this scenario seems unlikely payers and providers must resolve the tension between statistical certainty that savings have been realized and providing a meaningful and attainable incentive for providers to generate savings. Ensuring Providers Succeed Payment reform provides an incentive for transformation of care delivery, but it does not ensure it. While most interviewed providers recognized this, the payers did not always convey the same understanding. In order to succeed, providers will need certain tools. Timely, trended performance data with targets and benchmarks, and the ability to manipulate data. Most payers are making some data available, but providers need more information. In addition, the provided data are neither consistent nor integrated across payers, except in cases where payers are sending non-medicare claims files to providers who do their own claims aggregation. Medicare is particularly challenged to provide this support. Knowledge and implementation of systems and processes to deliver better care more efficiently. While some interviewed payers expressed an assumption that large organizations would be able to figure it out, there are reasons to doubt that providers will always know how to fundamentally transform their businesses. The largest provider organizations have invested heavily in consulting services, process redesign, and infrastructure development, but not all provider organizations have the capacity to do so. Smaller provider organizations and those in poor financial health may have great difficulty responding to the incentive presented by the opportunity to share savings. 7 Aligning Measurement While some degree of variation across payers may be of value in the near term, competing sets of performance measures in shared-savings methodologies could eventually harm the effectiveness of the payment models, since providers will find it difficult to focus. There may be opportunities for regional coalitions to identify a common framework with which nonfederal payers might align. Refining the Shared-Savings Model National expectations are high that payment and delivery system reform, simultaneously being advanced by both public and private sector payers, will finally slow the inexorable march of health care cost growth. The scope and complexity of the challenge make it unlikely that the great expectations of today will be immediately realized tomorrow. It will be necessary to learn within and across payer and provider organizations from initial successes and failures and to maintain a resolve to persistently refine the payment model to maximize effectiveness.

17 12 the Commonwealth Fund HOW THIS STUDY WAS CONDUCTED This issue brief is one of several projects funded by The Commonwealth Fund to document alternative payment models. Most closely related is a project being conducted in parallel by Catalyst for Payment Reform to identify and document ACO shared-risk programs in the public and private sectors. The two project teams have collaborated in their respective work to ensure as comprehensive a list of shared-savings and shared-risk models as possible. Bailit Health Purchasing conducted 32 telephone interviews with payer and provider organizations and state agency agencies that indicated they were involved in 27 independent past, current, and planned shared-savings payment arrangements. Interviews were performed using a structured instrument. In addition, Bailit considered the Notice of Proposed Rule-Making for the Medicare Shared Savings Program, released on March 31, 2011, by the Centers for Medicare and Medicaid Services (CMS), as an additional shared-savings model for comparative analytical purposes. The assessed shared-savings programs were primarily applied in primary care practice medical home programs and in ACO-like payment arrangements involving a more broadly defined provider organization such as a multispecialty group practice, integrated delivery system, physician hospital organization, or independent practice association. While the medical home shared-savings programs also involved the payment of supplemental payments (typically per member per month), the ACO-like sharedsavings programs did not. Approximately one-third of the arrangements were formed through medical home or medical home-like programs. Because the medical home and ACO-like shared-savings models did not differ considerably in construction beyond medical home programs providing supplemental per member per month payments, the findings are reported in an integrated fashion. With the notable exception of the Medicare Physician Group Practice demonstration and experience in California, most of the case examples have been of relatively short duration. 8 Approximately twothirds of the arrangements had 2010 or 2011 start dates. In addition, only the Physician Group Practice demonstration had been formally evaluated for effectiveness. 9 Finally, it is worth noting that not all selfdescribed shared-savings models meet the definition provided above. In one instance an interviewee revealed that an insurer operated a predefined bonus pool that distributed bonus payments based on provider success in reducing costs. In another instance, the extent to which a provider generated savings influenced the degree to which the provider s fees would be increased in the following year.

18 Key Design Elements of Shared-Savings Payment Arrangements 13 Notes 1 D. McCarthy, R. Nuzum, S. Mika, J. Wrenn, and M. Wakefield, The North Dakota Experience: Achieving High-Performance Health Care Through Rural Innovation and Cooperation (New York: The Commonwealth Fund, May 2008); and M. Bailit, Payment Rate Brief (Washington, D.C.: Patient- Centered Medical Home Initiative, March 2011). 2 By excluding acute-care services due to accidents over which the provider may have little perceived influence, at least one initiative believed it could reduce the amount of random variation in medical expenses. It is worth noting that Medicaid payers view accidents as potentially preventable, since they may be attributed to misuse of alcohol or other substances. 3 The circumstances are as follows: 1) all ACO participants are physicians or physician groups; 2) 75 percent or more of the ACO s assigned beneficiaries reside in counties outside a metropolitan statistical area; 3) 50 percent or more of the ACO s assigned beneficiaries were assigned on the basis of services received from Method II Critical Access Hospitals; and 4) at least 50 percent of the ACO s assigned beneficiaries had at least one encounter with a participating rural health clinic or federally qualified health center. 4 Centers for Medicare and Medicaid Services, What Providers Need to Know: Accountable Care Organizations (Washington, D.C.: U.S. Department of Health and Human Services, April 2011), Providers_Factsheet_ICN pdf. 5 In arrangements where the payer has provided prospective payments, as is common in medical home models, those payments are typically netted out of any savings. 6 M. A. Zezza, Proposed Rules for Accountable Care Organizations Participating in the Medicare Shared Savings Program: What Do They Say? (New York: The Commonwealth Fund, April 2011). 7 Research suggests that pay-for-performance has proven less effective with hospitals in poor financial health than for those in a strong financial condition. See R. M. Werner, J. T. Kolstad, E. A. Stuart et al., The Effect of Pay-for-Performance in Hospitals: Lessons for Quality Improvement, Health Affairs, April (4): This demonstration was a model for the Medicare Shared Savings Program. Its design differed from the proposed draft Shared Savings Program in several ways. A few examples include 1) the demonstration s focus on very large practice organizations, 2) the demonstration s exclusive use of shared savings (and not shared risk), and 3) the use of an external control group to assess savings achievement as opposed to calculating expected spending based on the previous three years of historical expenditures for the same assigned patients. 9 The evaluation concluded, The improvement in the quality measure processes and reporting in the first two years of the demonstration suggest that access has been improved while providing high quality care. The effect of the demonstration on promoting expenditure savings is less certain. See K. Sebelius, Report to Congress: Physician Group Practice Demonstration Evaluation Report (Washington, D.C.: U.S. Department of Health and Human Services, 2009), DemoProjectsEvalRpts/downloads/PGP_RTC_Sept. pdf.

19 14 the Commonwealth Fund Appendix. Interviewed Organizations Organization Advantra Total Care (KS) AdvocateCare (IL) Anne Arundel Health Systems (MD) Anthem Blue Cross (CA) Baptist Health System (TX) Billings Clinic (MT) Blue Cross Blue Shield of Illinois Blue Cross Blue Shield of Minnesota* Blue Cross Blue Shield of Tennessee Blue Shield of California Capital Blue Cross (PA) CareFirst (MD) Centers for Medicare and Medicaid Services (Medicare Physician Group Practice Demonstration) Centers for Medicare and Medicaid Services (MMA 646 Medicare Health Care Quality Demonstration programs in Indiana and North Carolina) Everett Clinic (WA) Fairview Health System (MN) Geisinger Health System (PA) Harvard Pilgrim (MA) Health Partners (MN) Independence Blue Cross (PA) Maryland Health Care Commission Massachusetts Executive Office of Health and Human Services Medica (MN) Northwest Physicians Network (WA) Norton Healthcare (KY) Pennsylvania Governor s Office of Health Care Reform Prometheus Payment Regence BlueShield of Washington Tucson Medical Center (AZ) UW Medicine Neighborhood Clinics (WA) Washington Health Care Authority WellStar Health System (GA) Organizational Type Provider Provider Provider Payer Provider Provider Payer Payer Payer Payer Payer Payer Payer Payer Provider Provider Provider Payer Provider Payer State State Payer Provider Provider State Payment organization Payer Provider Provider State Provider Note: In a few instances a consultant to a state was interviewed in lieu of state personnel. * Interview performed by Booz Allen and results shared with Bailit Health Purchasing, LLC.

20 Key Design Elements of Shared-Savings Payment Arrangements 15 About the Authors Michael Bailit, M.B.A., is president of Bailit Health Purchasing, LLC. For the past 15 years, Mr. Bailit has worked extensively with public agencies, purchaser coalitions, and employers to advance the effectiveness of their health care purchasing activities. He previously served as assistant commissioner for the Massachusetts Division of Medical Assistance and as a benefits manager for Digital Equipment Corporation. He also has experience working in the health insurance industry. Mr. Bailit received a master of business administration degree from the Kellogg Graduate School of Management at Northwestern University. Christine Hughes, M.P.H., has been a senior consultant with Bailit Health Purchasing for more than 10 years. Ms. Hughes work at Bailit Health includes research on best practices regarding: payment reform, patientcentered medical homes, pay-for-performance, and value-based insurance design. She previously served as Deputy Director for the Medicaid Managed Care Program at the Massachusetts Division of Medical Assistance. She also has experience in network contracting with a large integrated delivery system (Partners Community Health Care) and a staff model HMO (Health Care Plan). Ms. Hughes received a master of public health degree from Boston University School of Public Health. Acknowledgments The authors would like to thank Stu Guterman and Anne-Marie Audet for their advice and feedback, and Suzanne Delbanco and Catherine Eikel Major for collaborating while conducting the parallel studies. Editorial support was provided by Deborah Lorber.

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22 Issue Brief: How to Improve the Medicare Accountable Care Organization (ACO) Program JUNE 2014 Authors: Mark McClellan, Director, Health Care Innovation and Value Initiative and Senior Fellow; Ross White, Project Manager; Larry Kocot, Visiting Fellow; The Engelberg Center for Health Care Reform at Brookings. Introduction Recent data suggest that Accountable Care Organizations (ACOs) are improving important aspects of care and some are achieving early cost savings, but there is a long way to go. Not all ACOs will be successful at meeting the quality and cost aims of accountable care. The private sector has to date allowed more flexibility in terms of varying risk arrangements there are now over 250 accountable care arrangements with private payers in all parts of the country with notable success in some cases, particularly in ACOs that have been able to move farther away from fee-for-service payments. Future growth of the Medicare ACO program will depend on providers having the incentives to become an ACO and the flexibility to assume different levels of risk, ranging from exclusively upside arrangements to partial or fully capitated payment models. Given that the first three year cycle of Medicare ACOs ends in 2015 and more providers will be entering accountable care in the coming years, the Centers for Medicare and Medicaid Services (CMS) has indicated that they intend to release a Notice of Proposed Rulemaking (NPRM) affecting the Medicare ACO Program. In anticipation of these coming changes, the Engelberg Center for Health Care Reform has identified a number of critical issues that warrant further discussion and considerations for ensuring the continued success of ACOs across the country. To support that discussion, we also present some potential alternatives to current Medicare policies that could address these concerns. These findings build on the experiences of the Engelberg Center s ACO Learning Network members and other stakeholders implementing accountable care across the country. In some cases, the alternatives might have shortterm costs, but could also improve the predictability and feasibility of Medicare ACOs, potentially leading to bigger impacts on improving care and reducing costs over time. In other cases, the alternatives could lead to more savings even in the short term. In every case, thoughtful discussion and debate about these issues will help lead to a more effective Medicare ACO program. The authors would like to acknowledge the following individuals for their contributions and editorial support: Alice M. Rivlin, Director, Engelberg Center for Health Care Reform, Senior Fellow, Economic Studies; Farzad Mostashari, Visiting Fellow; and Christine Dang-Vu, Project Manager.

23 Introduction Accountable Care Organizations (ACOs) represent an increasingly widespread approach to address inefficiencies, lack of coordination, poor quality care, and increasing costs in the US health care system. While there is considerable diversity in organizational structure and payment models among ACOs, they all have the common goal of controlling health care costs while improving the quality of care they deliver. Ultimately, an ACO aims to move toward a payment and delivery system that provides high value personfocused care. The number of Medicare ACOs continues to increase since the first round of participants was announced in The Medicare Shared Savings Program (MSSP) is an example of a shared savings model, in which participating ACOs are eligible to earn an additional payment on top of existing FFS payments if they reduce spending below a benchmark and meet quality standards. In almost all cases, these ACOs are not subject to penalties ( downside risk ) if they spend more than projected only a handful of MSSPs have assumed downside risk to date. This one-sided risk model is a first step toward provider accountability to encourage work across the care continuum to reduce overall costs. There are currently 338 MSSP participants. ACOs with more experience and infrastructure to support care reforms may take on two-sided risk, including partial capitation, to provide more incentive and flexibility to redirect resources to high-value services. This includes the 23 participants in the Medicare Pioneer Program, as well as a growing number of ACOs working with private plans. First year financial results are now available for both the MSSP and Pioneer ACOs. Of the 114 MSSP ACOs that joined the program in 2012, 54 were able to keep costs below their budget benchmark, but only 29 were able to hold down costs enough to qualify for shared savings. These successful ACOs received $126 million in savings, while the CMS trust fund realized savings of $128 million, around 1 percent of costs. The other 60 MSSP ACOs experienced spending above their set benchmark, two of which had losses because they chose to assume two-sided risk upon entering the program. Meanwhile, the Pioneer program generated $147 million in total savings, with approximately $76 million in savings returned to ACOs and $69 million returned to Medicare, around 2% of costs. Of the original 32 Pioneer ACOs, 12 qualified for shared savings, one shared in losses, and 19 did not share in savings or losses. Almost all MSSP participants and Pioneer ACOs successfully reported on quality metrics, a majority of which performed better than comparable organizations where data was available. These results suggest that ACOs are improving important aspects of care and some are achieving early cost savings, but there is a long way to go. Not all ACOs will be successful at meeting the quality and cost aims of accountable care. The private sector has to date allowed more flexibility in terms of varying risk arrangements there are now over 250 accountable care arrangements with private payers in all parts of the country with notable success in some cases, particularly in ACOs that have been able to move farther away from fee-for-service payments. Future growth of the Medicare ACO program will depend on providers having the incentives to become an ACO and the flexibility to assume different levels of risk, ranging from exclusively upside arrangements to partial or fully capitated payment models. Given that the first three year cycle of Medicare ACOs ends in 2015 and more providers will be entering accountable care in the coming years, the Centers for Medicare and Medicaid Services (CMS) has indicated that they intend to release a Notice of Proposed Rulemaking (NPRM) affecting the Medicare ACO program. In anticipation of these coming changes, the Engelberg Center for Health Care Reform has identified a number of critical issues that warrant further discussion and considerations for ensuring the continued success of ACOs across the country. To support that discussion, we also present some potential alternatives to current Medicare policies that could address these concerns. These findings build on the experiences of ACO Learning Network members and other stakeholders implementing accountable care across the country. In some cases, the alternatives might have short-term costs, but could also improve the predictability and feasibility of Medicare ACOs, potentially leading to bigger impacts on improving care and reducing costs over time. In other cases, the alternatives could lead to more savings even in the short term. In every case, page 1

24 Issue Brief: Changes to the Medicare ACO Program Engelberg Center for Health Care Reform l June 2014 thoughtful discussion and debate about these issues will lead to a more effective Medicare ACO program. I. Make Technical Adjustments to Benchmarks and Payments In order for ACOs to qualify for shared savings, they must be able to hold spending below a financial benchmark set using historical spending patterns and meet a certain threshold of person and populationlevel quality metrics. How these benchmarks are set can substantially impact the chances of succeeding as an ACO and being able to attain shared savings. Financial Benchmark Calculations: The financial benchmark for Medicare ACOs is calculated using Part A and Part B fee-for-service expenditures from the previous three years for beneficiaries attributed to the ACO. Beneficiaries are attributed in MSSP based on a prospective-retrospective attribution model in which CMS makes a preliminary assignment of individuals to ACOs at the beginning of the performance year, which is then adjusted retrospectively at the end of the year based on whether patients received a plurality of their services from ACO providers. ACOs that are able to make significant progress against their historical spending trend are able to share in savings. However, because the benchmark depends in part on actual trends in Medicare spending as well as on beneficiary attribution that is not fully determined in advance, one of the biggest concerns for many ACOs is the lack of predictability about how they are performing, and the specific standards they are being held to, in their efforts to improve care. Further, the benchmark is recalculated at the beginning of each performance cycle using the preceding three years of spending. As a result, ACOs that are most successful at reducing costs will see their financial baseline continue to shift downward. Given the limited updates built into fee for service payments which form the basis for the benchmark, ACOs will have to achieve continuing improvements in efficiency be able to make financial progress against their financial baseline every year. Furthermore, the minimum savings rate (MSR) creates disincentives for smaller ACOs to participate in the ACO program, since it is based on the number of attributed beneficiaries and results in these smaller organizations being held to a minimum savings rate (MSR) that is higher than their larger colleagues. One key challenge for the next round is to refine the financial benchmark calculation in such a way that it provides more predictable targets for participating organizations, and that it encourages real and continuous improvement without becoming unachievable. Regional Variation in Financial and Quality Performance: Regional health care markets vary substantially. Some ACOs worry that their cost and quality benchmarks might not accurately reflect what is in fact possible within their given region or with their attributed patient population. While using a national growth rate for Medicare Part A and Part B services to calculate financial benchmarks encourages more convergence in costs over time, it means that ACOs in areas with lower intrinsic growth rates may have an easier time meeting their benchmark than ACOs in areas that have been growing at higher rates. On the other hand, because the benchmarks also depend on baseline cost levels, ACOs in high-cost areas of the country will have initial financial benchmarks above those of other areas of the country and require less work against the benchmark in order to qualify for shared savings. Altogether, because implementing an ideal benchmark for each market is difficult, cost reduction or quality improvement in one market may be significant and qualify for shared savings, while the same change in another market might not qualify the ACO for savings. Risk Adjustment: A central piece of calculating an ACO s financial benchmark is effective risk adjustment for the attributed patient population. The benchmark is adjusted according to expected health care costs for the organization s assigned patients over the coming year. This risk adjustment is meant to account for the fact that some ACOs will have a disproportionately sicker and more costly patient population that requires additional work in order to keep costs controlled while also improving quality. One challenge, however, is that the risk adjustment is done prospectively and only accounts for patient diagnoses and conditions in the prior year; this approach is intended to deter additional coding after an ACO is implemented that reflects changes in reporting and not health status. However, it also prevents real changes in patient or population health page 2

25 Issue Brief: Changes to the Medicare ACO Program Engelberg Center for Health Care Reform l June 2014 status after the performance year has begun to be reflected in the benchmark. Potential Policy Alternatives Refine how national and regional factors are incorporated into the calculation of the baseline. For example, to reflect regional variations in spending), and refine risk adjustment methods used in calculating benchmarks. Hold all ACOs accountable to a standard minimum savings rate (MSR) of no more than 2 percent, regardless of number of attributed beneficiaries. Add optional years 4 and 5 to performance cycle without spending rebasing, or transition to a rolling average calculation, in order to allow ACOs more time to succeed in transitioning to accountable care. II. Transition to More Person-Based Payments The ultimate goal of an ACO is to improve quality at the patient and population level and control the growth of health care costs. In order to successfully achieve this goal, ACOs likely need more flexibility in moving away from fee-for-service payments. This involves making a transition to payments that involve the assumption of more risk by the provider organization with rewards for better health outcomes for groups of patients. This could begin with twosided risk in the MSSP but eventually move toward partial or full capitation. However, taking on greater accountability for costs is challenging, particularly for organizations that have limited data and experience to understand and address financial risks. Create Transition Path for Increasing Accountability: Each organization is approaching accountable care with different levels of experience and capacities to assume financial risk for delivering high quality care. Given the diversity of organizational knowledge and comfort, the Medicare program must be able to accommodate needs that reflect these differences. The biggest financial challenge for ACOs is the transition from one-sided to two-sided risk very few MSSP participating organizations assumed two-sided risk in their first performance cycle, yet under current regulations, they will all have to transition to twosided risk in subsequent cycles. Not all ACOs are certain that they can make this shift without significant additional support. The Pioneer program helps to facilitate this process for more advanced systems succeeding under accountable care by providing the option of moving to Population Based- Payments, but MSSP does not have a similar path for its participants. Less advanced ACOs question if and when they would be able to move to a more capitated payment system, whereas some more advanced provider organizations have already moved in this direction through Medicare Advantage arrangements. There is no one determined path for an ACO to assume increasing levels of risk. Include Medicare Part D in ACO Arrangements: Medicare Part D expenditures are currently not a part of the benchmark calculation for ACOs and this effectively protects ACOs from risk for pharmaceutical costs and utilization. Pharmacy services can play a major role in generating savings and improving quality. Increased integration or inclusion of Part D holds the potential to address some obstacles currently facing ACOs in their efforts to align with pharmacies, PBMs, and pharmaceutical manufacturers to improve care. Inclusion of Part D data for ACOs would also be extremely helpful in identifying opportunities for quality improvement and thus reducing uncertainty about improving performance in the program. Potential Policy Alternatives Add additional tracks in MSSP to allow ACOs to advance to different levels of risk depending on experience and goals. Create a transitional path towards prospective Population Based Payment or other capitationbased payment models. How those rates should be set will need to be decided. CMS would require assurances of financial viability such as through capital reserves or surety bonds. Require two-sided risk for large organizations after first performance cycle, but permit extended onesided risk for smaller organizations. Create opportunities for coordination to improve care and to share the associated savings and risks between ACOs and groups involved in Part D services. page 3

26 Issue Brief: Changes to the Medicare ACO Program Engelberg Center for Health Care Reform l June 2014 III. Increase Beneficiary Engagement While providers are ultimately accountable for the cost and quality of care delivered within an ACO, patients can play a critical role in improving their own health and helping to achieve the goals of the organization. Health outcomes are determined by whether patients adhere to prescribed therapies taking prescribed medications, participating in followup appointments and engaging in healthy behaviors. Costs are also significantly influenced by patient choices about providers and therapies. Increasing beneficiary engagement holds the potential to make patients more activated members of the ACO who can contribute to its success. Structural elements, including the current attribution model, and lack of financial incentives have precluded effective beneficiary engagement to date. Current Attribution Methodology Hinders Care Coordination: As described above, the prospectiveretrospective attribution model in MSSP uses preliminary assignment at the beginning of the performance year, which is then adjusted retrospectively at the end of the year. Retrospective attribution means that providers cannot accurately determine which patients they are responsible for providing care to within the ACO. Likewise, despite the requirement that patients be notified of their attribution and allowed to opt out of data sharing, many patients are often unaware that they are part of an ACO. Without a complete understanding of the attributed population or patients, the ACO can struggle to effectively implement practice transformation targeted at these individuals. Many organizations experience significant leakage as patients seek care from providers outside of the ACO, which the ACO is still financially responsible for managing. Similarly, this leakage causes significant challenges for effective care coordination. Patients Lack Incentives to Seek Care in the ACO: The leakage described above is also due in part to the fact that patients currently lack incentives to stay within the ACO s network of providers. Without seeing a positive effect of remaining with the ACO, patients may defer to providers that are more convenient, including going to the Emergency Department for services that could be provided by a primary care physician. Adding financial incentives for patients to see certain providers may help the ACO to achieve its goals and lead to better overall health management for patients. These behavioral levers can also help foster a stronger patient-physician relationship in which providers and patients have a shared vision for how to improve patient health and well-being. Patients are Not Activated Members of the Care Team: More fundamentally, even if patients know that they are attributed to an ACO, they may have little to no understanding about what makes an ACO unique and how it can help them improve their health or lower their medical spending. Without knowledge of the ACO s purpose or goals, patients have little incentive to become a part of the care team. ACO providers are often not equipped or fail to take the time to describe to patients why they have created an ACO and how it can benefit the patients care. Patients who are informed about the goals of an ACO and its dual mission of improving quality and reducing costs can feel more activated and contribute positively to the success of the ACO. Potential Policy Alternatives Allow beneficiaries to actively choose ACO assignment and remain attributed despite billing patterns. Alternatively, permit ACO non-attribution for patients who opt out of data sharing. Create benefits to incentivize use of ACO providers and institutions (reduced copays, deductibles). Create more opportunities for fostering engagement between the ACO and beneficiaries (e.g. add a welcome to ACO visit, or permit more extensive communications between the ACO and its beneficiaries). Allow shared savings for beneficiaries, contingent upon a set of conditions, such as active participation of patient in care. IV. Enhance and Improve Alignment of Performance Measures A central tenet of Medicare ACOs is delivering high quality health care as reflected in performance on 33 measures established by CMS. ACOs must meet performance benchmarks in order to be eligible for shared savings, to help ensure that these organizations are delivering high value, rather than simply cheaper, care. While these measures are page 4

27 Issue Brief: Changes to the Medicare ACO Program Engelberg Center for Health Care Reform l June 2014 critical for holding ACOs accountable for high quality care, the measures themselves and the process of collecting and reporting them have been criticized. Administrative Burdens: The current quality reporting program requires extensive chart reviews and imposes significant administrative burdens on ACOs. Despite the introduction of electronic health records and other IT systems to capture more clinical data, many ACOs find the process of collecting and translating the data into a form that can be used by CMS to be very time consuming. While CMS does conduct webinars to assist ACOs with understanding how to report data via the GPRO (Group Practice Reporting Option) Web Interface, many ACOs have expressed a desire to have more assistance from CMS, including expanding the reporting period or being able to seeing a sample set of reporting data. Regardless of support from CMS, most providers will need to invest in new support technologies or services to develop clinical workflows capable of both improving care and meeting requirements for measure reporting. Lack of Measure Alignment Among Payers: Even if able to accurately collect and report quality measures, ACOs struggle with the volume of measures that they are held responsible for improving. This is particularly problematic for ACOs with commercial accountable care arrangements, since these payers typically require performance reporting on their own set of measures. In most cases, commercial payers have more quality measures than Medicare and some measures that may not align at all with those required by CMS. Many providers may also be held accountable for measures beyond their accountable care arrangement, such as through Medicare Star Program or Medicaid. Some ACOs have reported upwards of 200 quality measures that they are held responsible for across their Medicare and commercial accountable care arrangements. While the measures may align conceptually, they often differ in their technical specifications, such as the calculation of the numerators and denominators or the actual benchmark used for assessment. As the number of measures continues to increase, the time and administrative burdens mount. The dispersion of measures may prevent ACOs from concentrating their efforts in the most cost-effective way that improves care for patients. This overall lack of alignment between payers creates an environment where ACOs must cater to different measures that may not complement, or could in fact conflict, with each other. Effectively Rewarding Quality Improvement: In order for an ACO to be eligible for shared savings, they must reach minimum attainment level for 70% of the measures in each domain; performance at or above the 90 th percentile is necessary to earn maximum points. The Medicare ACO program is currently structured such that an ACO s quality score can only reduce the ACO shared savings, rather than increase it. As a result, some ACOs feel as though the quality improvement program is penalizing rather than rewarding performance. Another barrier to effective quality improvement for ACOs is the fact that quality benchmarks are not fully set prior to the performance year. Given the importance of meeting the benchmarks, ACOs would benefit greatly from having a target in advance of the beginning of the performance year. Concerns about Measure Selection: More fundamentally, some ACOs believe that even the 33 measures they are held responsible for in the Medicare program are not the most meaningful available. This includes concerns that measures may not accurately reflect appropriate patient care, as well as that measures for outcomes that might be more reflective of high-value care are not included. Some of the current Medicare ACOs measures focus on process, rather than outcomes, which some believe do not capture the true impact on care. For example, conducting a falls risk assessment may help to understand which patients are at highest risk of injury, but does not necessarily ensure that the ACO is taking action to prevent those injuries from occurring. Moving toward more outcome-based measures could better capture the true quality of care being delivered to patients. In addition, adding measures that better reflect functional status or patients level of engagement in their care could help the ACO to foster a more collaborative care environment that meets the patients needs. When ACOs do not see the value of certain measures they struggle to understand how to use these measures to transform care. The burden of collecting less meaningful measures prevents an ACO from focusing their efforts on meaningful practice transformation. page 5

28 Issue Brief: Changes to the Medicare ACO Program Engelberg Center for Health Care Reform l June 2014 Potential Policy Alternatives CMS could enable easier and more streamlined electronic reporting from the data systems used in care delivery. Better integration with existing health IT systems, meaningful use requirements, and registries would allow ACOs to spend less time reporting their performance and more time focusing on meaningful clinical interventions. An ACO s quality score could be used to award additional shared savings for improvement in measure scores, rather than as a means to reduce the shared savings amount. Greater CMS efforts could be devoted to bringing more convergence with commercial plans around the priorities defined by the National Quality Strategy and other quality programs. CMS could support more interaction and greater transparency with existing ACOs on the measure selection process. CMS could consider dropping measures, such as falls risk assessment, which many ACOs believe is not a meaningful metric of success, while adding other metrics that might better capture clinical transformation and improvement, such as functional status, safety-related metrics, medication therapy, resource use, patient engagement, and mental health status. V. Enable Better and More Consistent Supporting Data In order to succeed, ACOs must be able to effectively collect, interpret, and use clinical and claims data to transform care of their patients. ACOs need to adopt new health IT systems and other technologies in order to collect and use the growing amount of data. Reconciling Data: One of the biggest challenges for ACOs, particularly those that are less experienced, is reconciling their own clinical data with the claims data that they receive from CMS. Without sufficient technical expertise, many providers struggle to match the data and understand how the information they receive from CMS can best be used to transform care. Further complicating the reconciliation process is the fact that there are often discrepancies between the quarterly and monthly reports that ACOs receive from CMS. When patient or system level data is inconsistent between reports, the providers struggle to assess their true performance over time. In addition, CMs provides patient data according to TINs (Taxpayer Identification Number), which is inconsistent with other health data reported according to NPIs (National Provider Identifier). This lack of alignment makes it challenging to assess individual provider performance. Patient Data Opt-Outs: Patients are currently allowed to opt out of having their data provided to their assigned ACO, but the ACO is not allowed to opt out of accountability for the costs of these patients. As a result, physicians and ACOs are not made aware of health services that the patient receives outside of the ACO. If and when the patient is attributed to the ACO, they are then held responsible for all of the beneficiary s health care costs without having the benefit of data to know how to intervene in order to improve care. Lack of Timeliness in Receiving Data: One of the biggest challenges that ACOs report is the time lag on data from CMS related to both quality and assignment. Quarterly assignment files are sent to ACOs after that quarter of the year has passed, meaning that the organization is constantly using attribution data that is several months behind and may no longer be relevant for targeting clinical interventions to the right patients. ACOs report similar delays in receiving claims data and feedback from CMS on their quality performance relative to the benchmark and to other ACOs. This lag also makes it harder for an ACO to assess when and how to intervene until it is perhaps too late to make a meaningful impact. Difficulty Tracking Patients Throughout the Health Care System: In addition to issues related to receiving data from CMS, ACOs also struggle to collect meaningful clinical data on all of their attributed patients. This is particular relevant when it comes to knowing when a patient has a relevant medical event, such as a hospital admission or discharge, or a transfer to another health facility. While more advanced systems are using Admission-Discharge- Transfer (ADT) notifications that interface with their patients electronic health records, not all ACOs are readily equipped to know all relevant clinical events. Without lack of notification for these changes in patient health status or care, ACOs can struggle to page 6

29 Issue Brief: Changes to the Medicare ACO Program Engelberg Center for Health Care Reform l June 2014 track their attributed patients through the health system. In tandem with related attribution issues, the ACO must be able to know when their patients receive care outside of their network of providers in order to appropriate manage both the cost and quality of that patient care. Delay in Performance Feedback: Given these lags in data from CMS and the need for time consuming reconciliation at year s end, many ACOs do not know how they are doing until months after a clinical event or a new intervention. These delays raise serious concerns for ACOs in terms of undertaking timely interventions that will make a real impact on cost and quality. Potential Policy Alternatives Potential Open source Policy the algorithm Alternatives that CMS uses for calculation of the quarterly reports. Include both Taxpayer Identification Number (TIN) and National Provider Identifier) information in CMS data reports. Permit ACOs to exclude attributed patients who opted out of monthly data sharing. Provide aggregate or de-identified information on patients that are not included in the monthly data. Increase the availability of Admission-Discharge- Transfer (ADT) notifications by focusing federally funded health information exchanges on them, and through the Stage 3 Meaningful Use requirements for eligible hospitals (as proposed by the Health IT Policy Committee). VI. Link to Additional Value-Based Payment Reforms ACOs are just one of many payment reforms that health care organizations across the country are implementing to improve quality and reduce costs. Aligning the vision and components of these other initiatives with ACO reforms has the potential to reinforce the shared goals of the initiatives and provide much more effective support for reforming the health system. However, there are barriers to achieving this alignment. Linking Bundled Payments for Episodes with ACOs: There are now thousands of contracted bundles between providers and payers across the country, which include both more traditional episodic care, such as joint replacement or cardiac procedures, as well as chronic and acute conditions, such as cancer and pregnancy. Many of these bundles now contain downside financial risk. The Medicare Bundled Payment for Care Improvement (BPCI) program now includes hundreds of providers covering over $1 billion in totaled bundled payments per year and increasing to $15 billion in a few months. Bundled payment programs in both the public and private sector are already showing evidence of better quality and lower costs. More importantly, these bundles for primary care and specialty care are increasingly being viewed as complementary payment models to ACOs and patient-centered medical homes. While bundles hold great potential to align and reinforce the goals of an ACO, there are also concerns about the potential for double dipping, or the same providers being rewarded twice for the same care in different payment models. Identifying more effective ways to foster multiple alternative payment models may well intensify the potential impacts of accountable care. Multi-payer ACOs: Many Medicare ACOs have already established accountable care arrangements with private payers. These commercial accountable care contracts differ quite a bit between payers and regional markets, which provide unique opportunities to develop arrangements that meet the needs of a patient population. However, they often do not align well with Medicare ACO requirements. Many ACOs feel as though CMS has done little to help their organizations develop new commercial accountable care arrangements, aside from the requirement that Pioneer ACOs contract with other payers such that a majority of their revenue is in outcomes-based contract by the end of the second performance year. Given that the patients attributed to a Medicare ACO represent only a fraction of the total population served by a given provider organization, it is prudent for ACOs to expand the number of contracts to create more aligned value-based care across the system. Increasing the percentage of patients being served by value-based contracts will allow the ACO to more easily transform care across the system, rather than selectively targeting interventions to just those patients attributed by Medicare. page 7

30 Issue Brief: Changes to the Medicare ACO Program Engelberg Center for Health Care Reform l June 2014 Defining an ACO Based on Tax Identification Number (TIN) Limits Other Payment Innovation: CMS has stated that providers with a single TIN cannot participate in more than one shared savings program in order to avoid a provider being rewarded twice for generating savings, sometimes referred to as double dipping. While this makes sense, it precludes some physician group practices from experimenting with more than one shared savings program. CMS is trying to prevent overlap of beneficiaries between different shared savings programs, but it has the adverse effect of not allowing the same organization to participate in multiple Medicare alternative payment arrangements. If attribution were based on National Provider Identification (NPI) or a blended TIN/NPI approach, it would allow physicians with the flexibility to choose which CMS program they wish to participate in and give provider organizations with the opportunity to experiment with additional payment models. Potential Policy Alternatives Allow providers to implement multiple alternative payment models bundles, ACOs, with options for accounting for savings attributable to each model Support the development of commercial ACO arrangements. Consider modifying the MSSP regulation to attribute ACOs by NPI or a blended TIN/NPI approach VII. Develop Bonus Payments and Other Participant Incentives In order to effectively transform clinical practice, ACOs must create or procure significant financial and human capital, as well as transform their information technology and delivery infrastructure. A recent survey estimates the average start-up cost for creating an ACO to be $2 million, with some ACOs investing significantly more in their first few years. Smaller ACOs Struggle to Secure Ramp Up Funding: An increasing number of physician groups and smaller provider networks are beginning to realize the potential value of becoming an ACO. However, their small size and lack of capital can be a barrier to transition into an ACO arrangement and structure. The significant upfront costs of practice and infrastructure transformation can impede the ACO movement and prevent organizations of all sizes from achieving success. While the Center for Medicare and Medicaid Innovation has provided upfront and monthly payments to 35 small and rural ACOs as part of the Advance Payment program, the program did not support payments to any ACOs in the latest round of MSSP program participants beginning in January Early results suggest that the Advance Payment Model can make a difference 30% of Advance Payment ACOs beginning in 2012 achieved shared savings, compared to 28% of other physician-led ACOs. Physician-led ACOs now account for more than half of all MSSP participants, so a real opportunity exists to assist these providers. Many Organizations are Uncertain if They Can Assume Risk and Succeed as an ACO: In addition to the financial investment necessary to become an ACO, many organizations are simply uncertain about whether they can succeed as an ACO. These questions are particularly pertinent for organizations without risk-based contracting experience. These organizations must be able to prove that they can adopt alternative payment models that move away from fee-for-service. These new payment paradigms are simply unchartered territory for many organizations. Providers considering becoming an ACO or moving to increasing levels of risk would benefit from more guidance on how to make this transformation and estimates of what kind of financial and quality improvements they will have to make in order to share in savings. Guidance might also provide more clarity for potential partners for the ACO who could provide assistance with up-front capital. Increasing the predictability of success for a given organization could significantly encourage participation in accountable care arrangements. Transforming Care Requires Significant Staffing and Clinical Changes: Becoming an ACO requires expanding the provider workforce and investing in new staff capabilities. New personnel may include care coordinators, internal health IT experts or contracted IT providers, clinical transformation use of health IT, and clinical transformation staff. Increasing clinical and support staff can be financially burdensome and time-consuming. Furthermore, many ACOs feel as though they are not actively page 8

31 Issue Brief: Changes to the Medicare ACO Program Engelberg Center for Health Care Reform l June 2014 rewarded for the clinical transformation that they undertake, since there are few billing codes to capture the non-traditional clinical work necessary to succeed as an ACO. In sum, ACOs must significantly increase their clinical and staff capabilities without the promise of long-term success or shared savings. Potential Policy Alternatives CMMI could expand the Advance Payment Models, which are under-powered with only 35 participants. They could also experiment with new payments specifically for ACOs which provide eligible participants with upfront or monthly payments or vouchers to support their care coordination infrastructure. Provide more clarity and/or flexibility regarding the program requirements for the interim payment option, and provide more clarity about the clinical and financial needs of ACOs based on experience to date, potentially helping to create a more robust marketplace for the reinsurance products required. Create a pre-qualification phase where the ACO is given an estimate of what their financial benchmarks will be prior to agreeing to enter MSSP. Facilitate fee for service billing codes that capture the various coordination and case management services provided by the ACOs; for example, through the use of monthly chronic care management fees due to be defined in the 2015 Physician Fee Schedule. improvement. At the same time as meeting quality measures, the ACO must also be reducing costs, and as many are learning, quality improvement and cost reduction do not always go hand in hand. In order to meet quality and cost benchmarks, ACOs need to learn lessons from each other on what works and what does not work. Each ACO has different strengths, weaknesses, and needs, which other ACOs have likely experienced at some point in their formation or operation. Peer organizations offer perhaps the best opportunity for shared learning and spreading of best practices among ACOs. A number of peer organizations and networks for ACOs exist today. If CMS were able to take more steps to support these organizations, either through financial or data support, ACO adoption could accelerate. Potential Policy Alternatives CMS could encourage and support a range of efforts to promote the sharing of best practices for quality improvement and cost reduction among providers, through peer-to-peer communication and other means. CMS could support a database of providerreported interventions, implementation learnings, and subsequent clinical outcomes. CMS could identify and provide support to partnering organizations to assist with the collection and sharing of best practices. VIII. Support Clinical Transformation Providers Need More Support in Undertaking Clinical Transformation: Becoming and succeeding as an ACO is a vast undertaking that nonetheless requires a strategy and immediate steps to begin to transform practice, finance, and operations. However, many providers, particularly those that are less experienced at systemic practice transformation, simply do not know where to begin with such changes. All ACOs are responsible for reporting and meeting the same 33 quality measures, some of which they may have never collected data on before. Depending on patient populations and experience in certain clinical areas, each ACO will be able to more effectively tackle different areas of quality page 9