ADEA Washington Update

Accountable Care Organizations May be Required to Assume Some Financial Risk

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Accountable Care Organizations (ACOs) work by making a group of providers jointly accountable for their patients’ health across care settings. The model encourages care coordination to improve patient health and save money by avoiding unnecessary tests and procedures. The ACO model has gained the attention of some oral health care providers as a possible vehicle for delivery of care.
ACOs represent a significant departure from the traditional fee-for-service payment model in which providers make money each time they charge for a service. Under the Affordable Care Act, ACOs can contract with Medicare to participate in Medicare Shared Savings Programs, which allow the ACOs to recoup money when they meet certain targeted savings goals.

In a meeting in November, members of the Medicare Payment Advisory Commission, an independent congressional advisory agency on Medicare issues known as MedPAC, raised the question of whether ACOs should also accept some financial risk — and not just financial benefits — if they fail to meet those targets.

Medicare’s current three-year ACO contracts, which begin to expire in 2015, are essentially risk free, and many MedPAC members say they now favor more use of a two-sided approach that would allow the ACOs to share in both potential monetary rewards and penalties, according to a November 7 report in CQ HealthBeat News.

There are currently 252 ACOs, which provide health care to 4.1 million Medicare recipients. “Ultimately, these ACOs need to be accountable for delivering on outcomes including costs lower than fee-for-service,” CQ quoted MedPAC member Scott Armstrong of Group Health Cooperative in Seattle as saying. The MedPAC commissioners are going to consider whether they want to provide guidance for increasing the financial accountability of ACOs in their next report to Congress and the Centers for Medicare and Medicaid Services (CMS).

Several MedPAC members nonetheless stressed that any move towards risk-sharing needed to be gradual, and wondered whether even greater financial incentives were needed to bring more ACOs into the Medicare fold. “We kind of need to make … fee-for-service less attractive, so that we keep moving forward,” said MedPAC Commissioner Craig Sammit of HealthCare Partners in Torrance, Calif.

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