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ACO-Bound? Consider the Financials First

David A. Lips, for HealthLeaders Media, December 30, 2010

Section 3022 of the Patient Protection and Affordable Care Act is has the innocuous name, "Medicare Shared Savings Program." Accountable care organizations are at the heart of this program, which is intended to coordinate healthcare providers serving patient populations of at least 5,000. Unlike many other parts of PPACA, this section does not establish a pilot program. Instead, it creates a fully active program with its own reimbursement structure.

The opening sentence of new Section 1899 of the Social Security Act indicates that there are significant financial dimensions to creating and running ACOs. To wit:

Not later than Jan. 1, 2012, the Secretary [of the Department of Health and Human Services (HHS)] shall establish a shared savings program … that promotes accountability for a patient population and coordinates items and services under [Medicare] parts A and B, and encourages investment in infrastructure and redesigned care processes for high quality and efficient service delivery (emphasis added). Indeed, the incentive for establishing an ACO is financial. If an ACO provider network manages costs and meets quality targets on patient care, Medicare will pay it a portion of its savings to the Medicare program.

ACOs may be modeled in various ways. Section 1899(b)(1) lists several possible configurations: professionals (physicians, physician assistants, nurse practitioners, and clinical nurse specialists) in group practices, networks of individual practitioners, joint ventures between hospitals and professionals, and hospitals employing professionals. ACOs do not have to include hospitals, although hospitals would be helpful partners because they would probably already have good infrastructure for reporting the information that HHS will require.

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