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How to Succeed in a Medicare ACO

Analysis  |  By Christopher Cheney  
   February 13, 2017

Payers and providers alike must adapt to leaner business models and patient populations that are older and frailer than a general patient population.

Medicare and commercial accountable care organization (ACO) models are not created alike.

MaineHealth ACO, which generated a Top 10 shared savings payment in the first performance year of the Medicare Shared Savings Program, has found that participating in MSSP is more financially challenging than commercial ACO contracts.

"From a financial perspective, our commercial payers are willing to help support the work that we do; so they see the value in our care management programs and the work that we do to integrate our physician practices," says Jen Moore, chief operating officer of MaineHealth ACO, based in Portland, ME.

"We do not get that kind of funding from the governmental programs," Moore says.

ACO Success Comes With Risk. Get Over It.

"All of the commercial payers are willing to pay a per-member-per-month fee to the ACO for doing care management, working to communicate within our care network and being the liaison between our providers and the payer. They see tremendous value in all of that."

Commercial accountable care contracts tend to have better financial incentives than MSSP offers for physician practices that participate in MaineHealth ACO, she says.

"For the physician practices, [commercial health plans] are willing to pay for pay-for-performance. So they will have a shared-savings arrangement; but many of them will also say, 'If you are also successful on quality metrics, then we are willing to pay you additional dollars for that success.' "

The leaders of ACOs must be prepared for tough contract negotiations with commercial payers. "It is not always rosy and we have to fight for that support. More and more payers are tying dollars to performance," says Moore.

"Though pay-for-performance is a reasonable approach, it doesn't recognize the upfront investments made by practices to do the work that is not paid for in our current fee-for-service environment."

Investing in ACOs
Aetna Inc. provides patient-centered medical home and paor-performance incentive payments to healthcare providers to help finance investments necessary to succeed in ACO contracts, says Paul McBride, MSPH, CEO of Accountable Care Solutions-Aetna, a business unit of the Hartford, CT-based commercial payer.

"Providers need to invest in primary care office staffing; information technology [such as] electronic medical record enhancements, a data warehouse and referral management tools; and a centralized support team," McBride says.

Analysis: Missed ACO Savings Due to Lack of Collaboration

"The health plan will often help offset some of these upfront provider costs with medical home or population health payments."

If ACOs and the physicians who participate in them operate successfully, then health plans can generate financial gains. "At Aetna, depending on the ACO model, we have seen from $7 to $29 per-member-per-month savings," he says.

As of December, Aetna had established contracts with more than 280 ACOs, according to McBride.

To increase their odds of success in a Medicare ACO model, provider organizations need to gear up for an opportunity that has high risks and potentially high rewards, says Emily Brower, MBA, vice president of population health at Newton, MA-based Atrius Health.

"For this population, which has high-risk patients, there does seem to be a significant return on bringing care to the patient. You have to know which patients will benefit most from the highest-cost part of your delivery system," she says.

For the 2015 performance year, Atrius earned $4.4 million in shared savings in the Pioneer ACO, Medicare's first ACO model that requires healthcare providers to assume both upside and downside risk for the costs of patient care. The nonprofit organization earned $2.8 million in shared ACO savings in 2014.

Atrius is now participating in Medicare's Next Generation ACO model.

"Sending care to one patient's home is expensive; but we were careful in identifying those patients, and so far that has had very positive ROI and the patient satisfaction is just incredible," Brower says.

Christopher Cheney is the CMO editor at HealthLeaders.

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