accountable care organizations an operational overvie · • advantages • simplified, single...

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w w w . e i d e b a i l l y . c o m

Chris ChampPrincipal

[email protected]

Accountable Care OrganizationsAn Operational Overview

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Medicare Spending

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CMS Goal – Transition of Risk

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0

10

20

30

40

50

60

2015 2016 2018

Percentage of payments tied to risk models:


CMS Goal – Transition of Value

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74

76

78

80

82

84

86

88

90

92

2015 2016 2018

Percentage of payments tied to quality

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Triple Aim

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Population Health – Wikipedia Definition

• Population health has been defined as "the health outcomes of a group of individuals, including the distribution of such outcomes within the group". It is an approach to health that aims to improve the health of an entire human population.

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ACO’s – Wikipedia Definition

An accountable care organization (ACO) is a healthcare organization characterized by a payment and care delivery model that seeks to tie provider reimbursements to quality metrics and reductions in the total cost of care for an assigned population of patients. A group of coordinated health care providers forms an ACO, which then provides care to a group of patients. The ACO may use a range of payment models (capitation, fee-for-service with asymmetric or symmetric shared savings, etc.). The ACO is accountable to the patients and the third-party payer for the quality, appropriateness and efficiency of the health care provided.

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ACO – CMS Definition

According to the Centers for Medicare and Medicaid Services (CMS), an ACO is "an organization of health care providers that agrees to be accountable for the quality, cost, and overall care of Medicare beneficiaries who are enrolled in the traditional fee-for-service program who are assigned to it."

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Accountable Care Organizations

• Current ACOs cover about 4 million of the 40 million Medicare beneficiaries

• New cohort announced on January 10 that 106 new Medicare ACOs were accepted into the program

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Types of ACO’s

• Medicare • Pioneer ACO’s• Shared Savings ACO’s• Advance Payment ACO• Next Generation ACO• NRACO

• Commercial/Private ACO’s

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Pioneer ACO’s

• Designed for health care organizations and providers that are already experienced in coordinating care for patients across care settings

• Designed to allow groups to move more quickly from shared savings payment model to a population-based model

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Shared Savings ACO’s

• Rewards ACOs that lower their growth in health care costs while meeting performance standards on quality

• Two models• One-sided• Two-sided

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• One sided model• Savings only• Sharing rate up to 50%• Based on quality performance• Up to 10% of benchmark

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• Two models• Savings and losses• Sharing rate up to 60%• Based on quality performance• Savings

• Up to 15% of benchmark• Losses

• 5% in first year• 7.5% in second year • 10% in third year

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Advanced Payment

• Response to lack of access to capital• Upfront fixed payment - $250,000• Upfront variable payment based on historically assigned

beneficiaries - $36• Monthly payment based on historically assigned

beneficiaries - $8

• Recoupment of payments through an offset of an ACO’s earned shared savings

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Next Generation ACO’s

• For those experienced in coordinating care for populations of patients

• Allows for higher levels of financial risk and reward

• Applications were due June 1, 2015 • Another round due May 1, 2016

• Anticipate 15-20 ACOs to participate

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Medicaid ACO’s

• Medicaid programs emerging

• Anticipate continued growth

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Medicaid ACO’s

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NRACO (and others)

• National Rural ACO• Rural ACO model consisting of rural providers coming

together to obtain the necessary lives and resources to enter the ACO market

• 6 initial ACOs• CMS AIM Grant • 24 new ACOs for 2016

• 175 communities• Medicare Shared Savings Model

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Commercial/Private ACOs

• Terms vary dependent on the individual ACO

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Shared Savings Example

5,000 Medicare beneficiaries

$7,500 spend per beneficiary

$37,500,000 total spend

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ACO Quality Measures and Performance Standards

• Quality measures affect MSSP amounts• 33 quality measures

• Patient/care giver experience• Care coordination/patient safety• At risk population• Preventive health

• Of the 33 measures, 7 measures of patient / caregiver experience are collected via the CAHPS survey, 3 are calculated via claims, 1 is calculated from Medicare and Medicaid Electronic Health Record (EHR) Incentive Program data, and 22 are collected via the ACO Group Practice Reporting Option (GPRO) Web Interface.

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• One Sided Model – required savings 2.0-3.9% depending upon number of lives

• For our example (3.9%) – minimum savings to begin sharing in savings = $1,462,500 or $293 per Medicare beneficiary

• Once this benchmark is met, savings the ACO would receive 50% (up to a 10% limit) on a “first dollar” basis

• $1,500,000 savings = $750,000 payment• $1,500,000 * 50%

• $8,000,000 savings = $3,750,000 payment• $8,000,000 * 50%• $3,750,000 limit ($37,500,000 * 10%)

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• Two Sided Model – required loss/savings 2%• For our example – minimum savings to begin sharing in

savings = $750,000 or $150 per Medicare beneficiary• Beyond this savings the ACO would receive 60% (up to a

15% limit) on a “first dollar” basis• $1,500,000 savings = $900,000 payment

• $1,500,000 * 60%• $8,000,000 savings = $4,800,000 payment

• $8,000,000 * 60%• $5,625,000 limit ($37,500,000 * 15%)

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Shared Loss Example

• Two Sided Model – required loss/savings 2%• For our example – minimum loss to begin sharing in loss =

$750,000 or $150 per Medicare beneficiary• Beyond this loss the ACO would pay 60% (up to a 5-10%

limit – depending on which year) on a “first dollar” basis• $1,500,000 loss = $900,000 shared loss

• $1,500,000 * 60%• $8,000,000 loss = $1,875,000 shared loss

• $8,000,000 * 60%• $1,875,000 limit ($37,500,000 * 5%)

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Other Medicare Payment Adjustments

• Value Based Purchasing• Readmission penalties• Hospital acquired conditions penalties• Bundled payments• Physician Quality Reporting System (PQRS) adjustment

• Will become MIPS adjustment in 2018

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VBP Reductions to Providers

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Value Based Purchasing Domain Weighting

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Readmission Penalty Reductions

• Up to a 3% reduction!• Keep adding the number of conditions that qualify

• Acute Myocardial Infarction• Heart Failure• Pneumonia• Chronic Obstructive Pulmonary Disease• Total Hip and/or Knee Arthroplasty

• Net saver for CMS% of

HospitalsPenalized

AvgHospitalPenalty

# ofHospitalsPenalized

U.S.* - .63% 2,610

* 39 hospitals received the maximum penalty

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Hospital Acquired Conditions (HAC) penalty

• FY 2015 a 1% penalty kicks in• 721 Hospitals are affected this first year – 1 in ND• CMS assessed rates of 10 patient injuries at hospitals

• Blood stream infections• Patient falls• Bed sores• Urinary tract infections• Collapsed lungs• Cuts that occur during or after surgery• Blood clots

• Net saver for CMS!

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Bundled Payments

• Set price for a pre-defined episode of care • Advantages

• Simplified, single payment• Discourages unnecessary care• Predictable price

• Most common services so far:• Surgery (Orthopedic, General)• Obstetrics

• New CMS Program• Comprehensive Care for Joint Replacement

• 75 MSA’s• Mandatory• No downside in year 1• Bismarck was one of the 75 MSA’s identified

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PQRS Payment Adjustment

Individual (EPs) and group practices who do not satisfactorily report data on quality measures for covered professional services will be subject to a negative payment adjustment under the (PQRS) beginning in 2015.

• 2013 program participation will affect 2015 payments by a 1.5% negative payment.

• 2015 program participation will affect 2017 payments by a 2% negative payment.

The PQRS negative payment adjustment applies to all of the EP’s or group practice’s Part B covered professional services under the Medicare Physician Fee Schedule (MPFS).

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Source: CMS

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Medicare ACO’s as of July 2012

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Medicare ACO’s as of January 2013

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Medicare ACO’s as of April 2014

Source: The Advisory Board35


Medicare ACO’s January 2015

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Share of Medicare Beneficiaries Enrolled in Medicare Advantage Plans, by State, 2013

NOTE: Includes MSAs, cost plans and demonstrations. Includes Special Needs Plans as well as other Medicare Advantage plans. Source: MPR/Kaiser Family Foundation analysis of CMS State/County Market Penetration Files, 2013.

National Average, 2013 = 28%

< 10% 10% ‐ 19% 20% ‐ 29% ≥30%(6 states) (14 states + DC) (15 states) (15 states)

DC 10%

35%

22%

0%

38% 17%

37% 35%

23%

7%

36%

25%

46%

30%

11% 21%

14%

12% 22%

26%

17%

8%

18%49%

12%

24%

15%

12%32%

5%

16%

29%

33%

20%

12%

37%

16%

42%

39%

20%

13%

29%

27%

33%

7%

15%

28%

21%

3%

33%27%

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ACOs Today

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NRACO Participants October 2015

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How does it work? – Beneficiary Attribution

• Beneficiaries are assigned (5,000 needed per ACO)• Beneficiary must have a record of enrollment• At least 1 month of Part A and Part B enrollment and no

months with Part A only or Part B only• No months of Medicare group (private) health plan

enrollment• Assigned to only one Medicare shared savings initiative• Must live in the United States or U.S. territories and

possessions• Must have a primary care service with a physician at the

ACO• Must have received the largest share of primary care

services from the participating ACO

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How does it work?

• Providers continue to get normal Medicare reimbursement (PPS or cost) during the year

• Benchmarked cost based on historical cost of patients attributed

• Savings/losses are calculated after the fact with the appropriate settlement

• Do not anticipate large savings early on• Comparison on how you did last year• Comparison on how you compare to others

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How does it work?

• New way of doing business – Value versus Volume• Care coordination – Chronic Care Patients

• Chronic Care Management • Two or more chronic conditions• Approximately $40 per month fee schedule payment (RHCs will be

reimbursed effective 1/1/16)• CPT 99490 Medicare Only?

• 1 coordinator per 200-300 patients• $100,000 - $150,000 annually in revenue???• Team effort

• Primary Care Physicians• Specialists• Mid-levels• Pharmacy• Therapies• Home Health• Nursing Home• Social Services• More…….

• Care coordination – all other patients• Team effort

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How does it work?

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Source: The Advisory Board


How does it work?

• New way of doing business – Value versus Volume• Need to add data integrity/analytics

• An immense amount of new data• Must improve utilization of your EHR• Monitor and improve coding

• Reimbursement impact versus future impact• Must be open to standardization

• Clinical pathways• Processes

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Does it work?

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Does is work?

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What is in it for community and hospital?

• Community• Improved health• Reduced cost to maintain health status• Improved life style

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• Hospital• It is a question of when, not if, some form of population

health will penetrate your market• Early adopters will have opportunity to develop competitive

advantage• Cost• Profitability• Health of community• Public relations

• It fits in our mission

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Factors to Consider in Selecting an ACO

• Population size• Beneficiary assignment• The balance of risk and reward• Confidence in savings potential• Available investment assistance• Regulatory waivers

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Source: The Advisory Board – “6 factors providers need to consider when choosing an ACO model”

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Non-Medicare Accountable Care Organizations

• Numerous payers are exploring ACO like arrangements with providers

• Providers are creating shared savings programs with Medicare Advantage payers

• Large physician groups are playing very aggressively on the ACO front in some markets

• Providers are identifying specific populations to create into ACOs – employees, large employer groups

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This presentation is presented with the understanding that the information contained does not constitute legal, accounting or other professional advice. It is not intended to be responsive to any individual situation or concerns, as the contents of this presentation are intended for general informational purposes only. Viewers are urged not to act upon the information contained in this presentation without first consulting competent legal, accounting or other professional advice regarding implications of a particular factual situation. Questions and additional information can be submitted to your Eide Bailly representative, or to the presenter of this session.

Questions?

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Chris ChampPrincipal

[email protected]

Thank You!

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