The Centers for Medicare and Medicaid Services (CMS) recently announced the selection of 89 new Accountable Care Organizations (ACOs) to participate in the Medicare Shared Saving Program (Shared Savings Program). Back in May, CMS announced the first 27 ACOs. The 89 ACOs brings the total number of organizations to 116. In January of this year CMS selected 32 Pioneer ACO’s , as well as six Physician Group Practice Transition Demonstration organizations that started in January 2011.
ACOs are organizations formed by groups of doctors and other health care providers that have agreed to work together to coordinate care for people with Medicare. A description of the new 89 ACOs can be found here.
Background
Section 3022 of the Affordable Care Act (ACA) added a new section 1899 to the Social Security Act that requires the Secretary of the Department of Health and Human Services (HHS) to establish the Shared Savings Program. The program is intended to encourage providers of Medicare-covered services and supplies (e.g., physicians, hospitals and others involved in patient care) to create a new type of health care entity, an ACO, that agrees to be held accountable for improving the health and experience of care for individuals and improving the health of populations while reducing the rate of growth in health care spending.
Studies have shown that better care often costs less, because coordinated care helps to ensure that the patient receives the right care at the right time, with the goal of avoiding unnecessary duplication of services and preventing medical errors.
On Nov. 2, 2011, CMS published a final rule in the Federal Register establishing the Shared Savings Program. The final rule addressed issues relating to eligibility, governance, beneficiary rights, quality measures and performance scoring, and CMS monitoring of the ACO operations. At the same time, the Innovation Center announced an Advance Payment ACO Model to test whether providing advance payments from anticipated savings could encourage certain rural and physician-based entities to apply to participate in the program, thereby increasing the amount and speed at which ACOs can improve care for beneficiaries and generate Medicare savings.
Federal savings from this initiative could be up to $940 million over four years.
New ACOs
“Better coordinated care is good for patients and it saves money,” said Secretary Sebelius. “We applaud every one of these doctors, hospitals, health centers and others for working together to ensure millions of people with Medicare get better, more patient-centered, coordinated care.”
“This new group of ACOs adds to a solid foundation,” said CMS Acting Administrator Marilyn Tavenner. “The Medicare ACO program opened for business in January and, already, more than 2.4 million beneficiaries are receiving care from providers participating in these important initiatives.” In all, as of July 1, more than 2.4 million beneficiaries are receiving care from providers participating in Medicare shared savings initiatives.
The selected ACOs operate in a wide range of areas of the country and almost half are physician-driven organizations serving fewer than 10,000 beneficiaries, demonstrating that smaller organizations are interested in operating as ACOs. Their models for coordinating care and improving quality vary in response to the needs of the beneficiaries in the areas they are serving.
Five of the ACOs announced today applied for a version of the program that allows them to earn a higher share of any savings by also being held accountable for a share of any losses if the costs of care for the beneficiaries assigned to them increase.
To ensure that savings are achieved through improving care coordination and providing care that is appropriate, safe, and timely, an ACO must meet quality standards. For 2012, CMS has established 33 quality measures relating to care coordination and patient safety, appropriate use of preventive health services, improved care for at-risk populations, and patient and caregiver experience of care.
Beginning this year, new ACO applications will be accepted annually. The application period for organizations that wish to participate in the MSSP beginning in January 2013 is from Aug. 1 through Sept. 6, 2012.
Now that the ACA is here to stay for a while, with the Supreme Court upholding the individual mandate, and making slight changes to the state Medicaid provision, CMS will likely be moving forward with rules and regulations to further implement ACOs and the ACO model. It will still be some time before CMS can determine whether ACOs are meeting their intended goals: improving patient care while reducing costs. Nevertheless, the focus on quality and shift to patient-centered and collaborative care is here to stay, and it can be expected given cost pressures and other economic factors, that more ACOs will come.