Characteristics of Accountable and Community Care Organizations (ACOs and CCOs)

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1 ACO Definition Organization of providers that shares responsibility for providing care to patients and is accountable for the care of beneficiaries assigned to it. Major Specifically addressed in the Differences Affordable Care Act (ACA) Rules have been issued to help guide interpretation of key provisions Organization Vertically integrated and organizations of care, which are Governance at minimum composed of primary care physicians, a hospital, and specialists Formal, legal and business organizations. Can use foundation model (physician group fully selfmanaged and wholly owned by physicians; medical foundation usually established as a taxexempt 501(c)(3) non-profit corporation; foundation contracts with the physician group(s) through a Professional Services Agreement specifying that the physician group provides professional services to the Foundation s patients; foundation typically owns and operates the facilities, equipment, and supplies of a practice employing nonphysician personnel) or clinical co-management model (participating providers buy shares in a separate management company, usually a LLC; allows physicians to align with a hospital yet retain their independent practices; equity interests can be equal among the parties, or one CCO Community based organization using patient centered primary care homes, fixed global budgets and efficiency and quality improvements to reduce costs. Not provided for in the ACA No rigid framework for implementation like ACOs Mostly state endeavors right now (OR and IL) May function as single corporate structure or a network of providers organized through contractual relationships Consumers will play a role in governing the organizations Governed by a majority interest of persons that share financial risk, providers, and the community (e.g., county government, a community advisory council).

2 Payment and Risk party can have a controlling interest; co-management company under this LLC structure may frequently contract with the hospital through a management services agreement; often, a third party consultant facilitates the comanagement model to ensure timeliness and success) Governed by providers, suppliers of services, and beneficiaries. Governing board must be responsible for measuring and improving performance. Based on a shared savings and shared loss model. Benchmark based on estimate of what the total expenditures for the group of beneficiaries would have been without the ACO. ACO gets shared savings if cost is lower, but must pay if higher. Wouldn't do away with fee for service but would create savings incentives by offering bonuses when providers keep costs down and meet specific quality benchmarks If not able to save money, would be stuck with the costs of investments made to improve care, such as adding new nurse care managers, but would still get to keep the standard Medicare fees. Also gives regulators the ability to devise other payment methods, which would likely ask ACOs to bear more risk. Based on a global budget with shared savings if performance standards are met. In OR, each CCO would receive a global budget to cover all services, and the directors decide how the money is parceled out. IL statute specifically states that care coordination must include risk-based payment arrangements related to health outcomes, the use of evidence-based practices, and the use of EMR. Providers Removed if they fail to meet quality standards. Removed if they fail to meet quality standards.

3 Primary care providers may only participate in one ACO, although hospitals and other providers may participate in more than one. May involve non-traditional health providers such as public health and wellness programs Providers are held directly responsible for the health of their patients and are evaluated based on their effectiveness, efficiency and quality of care in treating patients. The responsibility piece is the key differentiator of ACOs compared to more traditional HMOs. Make providers jointly accountable for the health of their patients, giving them strong incentives to cooperate and save money by avoiding unnecessary tests and procedures. Quality Must meet established quality/performance measures. Beneficiary experience of care survey required. May participate in more than one CCO. Emphasis on hiring community health workers. Emphasis on prevention and nonmedical components to health (e.g., housing, transportation) Must meet established quality/performance measures. Consumer and caregiver satisfaction considered. Beneficiaries Not required to stay in network Minimum of 5,000 Special Considerations Strong emphasis on primary care and reducing overall costs of care. Although physicians will likely want to refer patients to hospitals and specialists within the ACO network, patients would still be free to see doctors of their choice outside the network without paying more. Some regions of the country, including parts of California, already have large multispecialty physician groups Align and integrate the care of duals. In OR, counties are the local mental health and public health authorities; CCOs will be required to have a formal, contractual relationship with the county or counties in which they operate.

4 Special Considerations for OH that may become an ACO on their own, likely by networking with neighboring hospitals. In other regions, large hospital systems are scrambling to buy up physician practices with the goal of becoming ACOs that directly employ the majority of their providers. Because hospitals usually have access to capital, they may have an easier time than doctors in financing the initial investment required by an ACO. Some of the largest health insurers in the country, including Humana, United Healthcare and Cigna, already have announced plans to form their own ACOs. Insurers say they can play an important role in ACOs because they track and collect data on patients, which is critical for coordinating care and reporting on the results. As hospitals position themselves to become integrated systems, many are joining forces and purchasing physician practices, leaving fewer independent hospitals and doctors. Greater market share gives these health systems more leverage in negotiations with insurers, which can drive up health costs. ACOs, particularly those in rural markets, could grow so large that they would employ the majority of providers in a region. How will health homes, projects related to coordinating care for duals, and the existing managed care system impact development of ACOs? Can Ohio s EMR culture support How will health homes, projects related to coordinating care for duals, and the existing managed care system impact development of CCOs? If a CCO is administered within the

5 the infrastructure necessary to implement ACOs? If ACOs are administered within the managed care framework, the State must consider how to share savings between the State, MCP, and ACO. Because one of the basic tenets of ACOs is reducing hospital utilization, the State should consider steps to mitigate the effect of reduced hospital revenue. The Center for Health Care Strategies suggests creating a risk corridor funded out of the shared savings pool to reduce the impact of drops in DSH reimbursement for safety net hospitals. managed care framework, the State must consider what a global budget will look like within the managed care framework. It would be advantageous for the State to engage community organizations as partners and include them in the governance structure. This is a good way to reach patients in rural areas.

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