ACO Definition Cont d 11/15/15. What is an Accountable Care Organization (ACO) Michelle S. McOmber, MBA, CAE CEO, Utah Medical Association

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1 Michelle S. McOmber, MBA, CAE CEO, Utah Medical Association What is an Accountable Care Organization (ACO) Accountable Care Organizations were created through the Affordable Care Act. Definition: An ACO is a network of doctors and hospitals that shares financial and medical responsibility for providing coordinated care to patients in hopes of limiting unnecessary spending. At the heart of each patient s care is a primary care physician. One of the main ways the Affordable Care Act seeks to reduce health care costs is by encouraging doctors, hospitals and other health care providers to form networks that coordinate patient care and become eligible for bonuses when they deliver that care more efficiently. ACO Definition Cont d Accountable Care Organizations (ACOs) are 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 both in delivering high-quality care and spending health care dollars more wisely, it will share in the savings it achieves for the Medicare program. Medicare offers several ACO programs: Medicare Shared Savings Program a program that helps a Medicare feefor-service program providers become an ACO. Apply Now. Advance Payment ACO Model a supplementary incentive program for selected participants in the Shared Savings Program. Pioneer ACO Model a program designed for early adopters of coordinated care. No longer accepting applications. 1

2 ACO Information The law takes a carrot-and-stick approach by encouraging the formation of accountable care organizations (ACOs) in the Medicare program. Providers make more if they keep their patients healthy. The health law created the Medicare Shared Savings Program. In it, ACOs make providers jointly accountable for the health of their patients, giving them financial incentives to cooperate and save money by avoiding unnecessary tests and procedures. For ACOs to work, they have to seamlessly share information. Those that save money while also meeting quality targets keep a portion of the savings. Providers can choose to be at risk of losing money if they want to aim for a bigger reward, or they can enter the program with no risk at all. Pioneer and MSSP Savings In 2014, the 20 ACOs in the Medicare Pioneer Program and 333 in the Medicare Shared Savings generated $411 million in total savings but after paying bonuses, the program resulted in a net loss of $2.6 million to the Medicare trust fund. That s far less than 1 percent of Medicare spending during that period. 2

3 ACO Core Principles While the ACO model is designed to be flexible, Mark McClellan, Elliott Fisher and others defined three core principles for all ACOs: Provider-led organizations with a strong base of primary care that are collectively accountable for quality and total per capita costs across the full continuum of care for a population of patients; Payments linked to quality improvements that also reduce overall costs; and, Reliable and progressively more sophisticated performance measurement, to support improvement and provide confidence that savings are achieved through improvements in care. Cost savings The ACO places a degree of financial responsibility on the providers in hopes of improving care management and limiting unnecessary expenditures while continuing to provide patients freedom to select their medical services. Success depends on: Clinical excellence Controlling costs by incentivizing hospitals physicians, post-acut facilities, and other providers to facilitate coordination of care delivery. Theory: By increasing care coordination, ACOs can help reduce unnecessary medical care and improve health outcomes, leading to a decrease in utilization of acute care services. According to CMS estimates, ACO implementation as described in the Affordable Care Act is estimated to lead to an estimated median savings of $470 million from HHS Goal The Department of Health and Human Services has set a goal of moving 50 percent of payments toward alternative models by Providers continue to experiment with different approaches to managing the health of populations and learn what works in practice within their unique organizations. (Incentivized to do so through CMMI) 3

4 Medicaid ACOs Expansion of Medicaid ACOs. Medicaid ACOs have grown significantly over the past year, and 16 states have now passed ACO legislation or have enacted ACO-like pilot programs. These states, including Alabama, Vermont, Oregon, New Jersey, and Utah represent a variety of different approaches ranging from capitated payments to payments closely mimicking the MSSP. Because of the large size of Medicaid programs and states ability to mandate payment models, states can accelerate the regional growth of ACOs if and when they decide to move toward accountable care. ACO Growth Leavitt Partners has been actively tracking ACOs since 2010, maintaining a database that is updated regularly from publicly available information and personal and industry interviews. Over the past year, approximately 120 organizations have become ACOs in public and private programs, bringing the total to 744 since ACO Covered Lives In addition to growth in the total number of ACOs, there has been continued growth in the number of people covered by ACO arrangements. Today a total of 23.5 million covered ACO lives. Of these, only 7.8 million are part of the Medicare ACO programs (Pioneer and MSSP), meaning that the majority of ACO volume is coming from the commercial and Medicaid sectors. 4

5 ACO Dispersion The geographic distribution of ACOs has continued to expand as ACOs have begun to form in more markets and to expand within markets. Accountable care organizations exist in all 50 states, Washington, D.C., and Puerto Rico, with the number of ACOs strongly correlated with the population (r s =.895, p<. 001). California has the most ACOs with 81, followed by Florida with 66 and Texas with 48. (See figure next slide). Number of ACOs by State, January 2015 Source: Leavitt Partners Center for Accountable Care Intelligence Growth in Number of ACO Contracts ACOs have increasingly expanded the number of contracts under which they are operating. For example, in 2011, 85 percent of ACO contracts were the organization s first contract. By 2014, only 59 percent of the contracts were first contracts. As of January 2015, 26 percent (192/744) of ACOs had more than one accountable care contract, and 10 percent (73/744) had three or more contracts. Overall, there are 1,046 known contracts for 744 ACOs. 5

6 New Accountable Care Contracts by Year Source: Leavitt Partners Center for Accountable Care Intelligence Payer Involvement The involvement of different payers has also continued to increase over the past year. January 2015, 132 different payers have entered into at least one accountable care contract, an increase of 26 since the end of These include Medicare, over a dozen state Medicaid plans, regional insurers, all of the large, national carriers, and some large, self-insured employers. Commercial payers most notably Cigna, UnitedHealth, and Aetna have significantly expanded their involvement in ACOs, with promise of more to come in 2015 (see figure next slide) Number of Payers Participating in Accountable Care, 2011 to January 2015 Source: Leavitt Partners Center for Accountable Care Intelligence 6

7 Physicians Accountable Care Solutions (PACS) Utah, Connecticut, Inland Empire (California), Colorado (County), Texas (one entity), Massachusetts, West Virginia, Pennsylvania and others participating in the PACS MSSP ACO 5700 Providers, 114,000 Attributed Lives Connecticut 131 Providers, 12,700 Attributed Lives Utah 837 Providers, 26,055 Attributed Lives Uses a software program called CareScreen to help physicians track and coordinate patient care Mainly focuses on well visits and transition visits Why State Societies Choose to Participate in an ACO Benefits Add value to Independent Members Allow Independents to Remain Independent keep competition in market Give State Medical Societies other Non-Dues Services to offer members can bring in money to run the services Changing times/remain relevant Downside Risk Tick off members that are doing their own ACOs competition PACS ACO Started 2015 No downside risk to physicians No upfront cost Shared Savings Program ACO Physicians get extra payments and shared savings UMA gets paid from shared savings Software Program CareScreen 2015 Shared Savings for all based on a few States Upside and downside to National ACO - Utah and two other states bringing in the Savings right now 7

Growth and Dispersion of Accountable Care Organizations in 2015

Growth and Dispersion of Accountable Care Organizations in 2015 Growth and Dispersion of Accountable Care Organizations in 2015 by David Muhlestein March 31st, 2015 In January, an additional 89 provider