ACO Manifesto: 50 Things to Know About Accountable Care Organizations

Only a couple of years ago, it wasn't uncommon for healthcare experts to call accountable care organizations "unicorns." Despite the excitement and discussion around the model, few people had seen one.

ACOs have grown to become much more visible within the past three years, as more than half of Americans now live in primary care service areas served by ACOs. To better understand the model and its role in healthcare reform, Becker's Hospital Review collected the following facts about ACOs. Topics include ACO goals, terminology, geographic spread, payment structures, and the specifics of Medicare and commercial ACOs.  

To learn more about individual ACOs, read the 2013 list of "100 Accountable Care Organizations to Know." 

ACO basics

1. The term "accountable care organization" was coined in 2006 by Elliott Fisher, MD, director of the Dartmouth Institute for Health Policy and Clinical Practice in Hanover, N.H.

2. An accountable care organization is a group of payers, physicians, hospitals and other healthcare providers that voluntarily collaborate to provide efficient, high-quality and coordinated care to an assigned population of patients. If providers reduce costs and/or improve specified quality metrics in a certain timeframe, they are able to receive financial rewards from or share in the savings with Medicare or a commercial payer. ACO arrangements can also involve risk, in which the provider would have to pay back a portion or all of the costs that exceeded the payer's established benchmark.

3. The goals of ACOs are nicely summarized in something known as "the triple aim," which was first articulated by Donald Berwick, MD, former acting CMS administrator. The three aims are (1) improving the experience of care, (2) improving the health of populations and (3) reducing per capita costs of healthcare.

4. Along with physician groups, health systems and insurers, ACOs can include a range of care settings. These include inpatient rehabilitative facilities, long-term acute-care hospitals, skilled nursing facilities and small physician practices. Physician groups are the largest leaders of ACOs, although hospital systems are a close second, according to a 2013 Leavitt Partners report.   

5. Provider organizations can participate in both Medicare and commercial ACOs at the same time.

6. Under both CMS' Medicare Shared Savings and Pioneer ACO programs, providers can continue to receive traditional fee-for-service Medicare payments while participating in an ACO. They are eligible for additional payments, or bonuses, based on meeting specified quality and saving requirements through the ACO.

7. ACOs require a robust network of primary care physicians to manage the health of a population. Some of the main goals behind ACOs are improved care coordination, enhanced preventive care delivery and the reduction or elimination of duplicative services.

8. As of February 2013, ACOs covered 37 million to 43 million Medicare and commercial patients, according to an Oliver Wyman report.

9. As of August 2013, 488 healthcare entities are practicing accountable care, according to a Leavitt Partners report.

10. Medicare ACOs now represent 52 percent of all ACOs, as there are 253 organizations contracting with CMS for accountable care, according to the August 2013 Leavitt Partners report.

11. Unlike a health maintenance organization, beneficiaries do not join ACOs — their providers do. Patients are notified of their providers' participation in a commercial or Medicare ACO. Patients can decline having their protected health information shared within the ACO, or choose to receive care from another physician if they do not wish to participate.

Terminology: Words and phrases associated with ACOs

12. A common role in ACOs is that of the care navigator or care coordinator. These are specially trained professionals, many times registered nurses, who help patients navigate the care continuum. In plainer language, this means they can help patients with a range of tasks, such as arranging and ensuring the patient gets to appointments, locating healthcare resources in the patient's community, providing follow-up contact to ensure medication compliance and reducing barriers the patient faces in his or her treatment plan.

13. ACOs are one model within the broader concept of population health management. This is a new way of looking at healthcare delivery. Traditionally, fee-for-service healthcare's definition of "population" is the group of patients present at the physician's office or hospital. Under pay-for-performance and ACOs, specifically, "population" refers to every patient who is covered by an ACO (which for Medicare, is at least 5,000 beneficiaries) — not just the patients who are in the physician's office or in the hospital.

According to the American Hospital Association, the definition of population health meets at the intersection of three distinct healthcare mechanisms. Improving population health requires effective initiatives to (1) increase the prevalence of evidence-based preventive health services and preventive health behaviors, (2) improve care quality and patient safety and (3) advance care coordination across the health care continuum.

14. The Center for Medicare and Medicaid Innovation was created by section 1115A of the Social Security Act, as added by section 3021 of the Patient Protection and Affordable Care Act. Part of CMS, the CMMI tests innovative payment and service delivery models, such as ACOs, that aim to reduce costs while maintaining or improving care quality.

15. Patient-centered medical homes are often seen as the "building blocks" of ACOs. The model is specific to primary care practices. In a PCMH, primary care physicians are part of a care team, which often includes health coaches who engage patients as active participants in their own health. The American Academy of Pediatrics, American Academy of Family Physicians, American College of Physicians and American Osteopathic Association have established seven principles for PCMHs.

16. ACOs strive to move reimbursement away from the fee-for-service model toward pay-for-performance. Under FFS, physicians are paid episodically based on how many patients they treat or how many tests they run — they get paid for the services they provide. Under a P4P model, physicians are reimbursed for their performance, based on a range of metrics that can include care quality, patient safety and outcomes, and cost of care.

17. The concept of pay-for-performance goes by many names, including pay-for-value, value-based purchasing and outcomes-based reimbursement. These terms refer to the same concept of no longer paying physicians for the volume of patients they treat.

Medicare ACOs

18. Two sections in the 2010 Patient Protection and Affordable Care Act contain text about ACOs: Section 2706 (Pediatric ACO Demonstration Project) and Section 3022 (Medicare Shared Savings Program).

19. HHS proposed its initial set of rules for ACOs in March 2011. HHS released the final rule in October 2011.
20. There are two main Medicare ACO programs: the Pioneer ACO Model and the Medicare Shared Savings Program. There is a third model, the Advanced Payment Model, which falls under the Shared Savings Program. Physicians, hospitals and other providers can only participate in one Medicare ACO.

21. ACOs are estimated to save the Medicare program up to $940 million in the first four years, according to CMS and HHS.

22. CMS measures quality of care using metrics in four main categories: patient/caregiver experience, care coordination/patient safety, preventive health and at-risk population, which includes diabetes, hypertension, ischemic vascular disease, heart failure and coronary artery disease.

23. In those four domains, there are 33 quality measures that ACOs must meet for shared savings:
•    CAHPS: Getting timely care, appointments and information
•    CAHPS: How well your providers communicate
•    CAHPS: Patients' rating of provider
•    CAHPS: Access to specialists
•    CAHPS: Health promotion and education
•    CAHPS: Shared decision making
•    CAHPS: Health status/functional status
•    Risk standardized all condition readmission
•    Ambulatory sensitive conditions admissions: Chronic obstructive pulmonary disease or asthma in older adults
•    Ambulatory sensitive conditions admissions: Heart failure
•    Percent of primary care physicians who successfully qualify for an EHR program incentive payment
•    Medication reconciliation
•    Falls: Screening for future fall risk
•    Influenza immunization
•    Pneumococcal vaccination for patients 65 years and older
•    Body mass index screening and follow-up
•    Tobacco use: Screening and cessation intervention
•    Screening for clinical depression and follow-up plan
•    Colorectal cancer screening
•    Breast cancer screening
•    Screening for high blood pressure and follow-up documented
•    Diabetes composite (all or nothing scoring): Diabetes mellitus: hemoglobin A1c control
•    Diabetes composite (all or nothing scoring): Diabetes mellitus: low density lipoprotein control
•    Diabetes composite (all or nothing scoring): Diabetes mellitus: high blood pressure control
•    Diabetes composite (all or nothing scoring): Tobacco non-use
•    Diabetes composite (all or nothing scoring): Diabetes mellitus: daily aspirin or antiplatelet medication use for patients with diabetes and ischemic vascular disease
•    Diabetes mellitus: Hemoglobin A1c poor control
•    Hypertension: Controlling high blood pressure
•    Ischemic vascular disease: Complete lipid panel and LDL control (<100 mg/dL)
•    Ischemic vascular disease: Use of aspirin or another antithrombotic
•    Heart failure: beta-blocker therapy for left ventricular systolic dysfunction
•    Coronary artery disease composite (all or nothing scoring): Lipid control
•    Coronary artery disease composite (all or nothing scoring): Angiotensin-converting enzyme inhibitor or angiotensin receptor blocker therapy – diabetes or left ventricular systolic dysfunction

Medicare's Pioneer ACO Program

24. Pioneer ACOs entered a three-year agreement with CMS with the option of extending the agreement for an additional two years based on performance. Pioneer ACOs cannot simultaneously participate in the MSSP program. CMS announced the original 32 Pioneer ACOs in December 2011. The first performance period for the Pioneers began Jan. 1, 2012.

25. Pioneers have a higher level of risk than MSSP ACOs and can achieve shared savings in the first two years under CMS' shared savings and losses model, in which the ACOs will share the savings or losses experienced by Medicare for an assigned set of patients. There is no option for a shared savings-only arrangement in the Pioneer program.

26. Pioneer ACOs have the opportunity to move from a fee-for-service to population-based payment in year three, which is a per-member-per-month payment amount designed to replace most or all of an ACO's FFS payments. They must also negotiate outcomes-based contracts with other payers by the end of the second performance year.

27. In their first performance year, all of the Pioneer ACOs improved quality, but just 13 achieved enough savings to share in them with Medicare. Overall, the Pioneers achieved a net savings of $33 million for Medicare Trust Funds.

28. In July 2013, nine Pioneer ACOs left the ACO model after CMS released preliminary results from the first performance year.

Medicare Shared Savings Program

29. Under the Medicare Shared Savings Program, providers must make a three-year commitment to care for a group of at least 5,000 Medicare beneficiaries.

30. CMS announced the first 27 Medicare Shared Savings Program ACOs in April 2012. The first performance period began April 1, 2012.
31. CMS announced 88 more MSSP ACOs in July 2012. The second performance period began July 1, 2012.
32. CMS announced another 106 MSSP ACOs in January 2013. The third performance period began Jan. 1, 2013.

33. CMS will announce a new class of MSSP ACOs in the beginning of 2014. The fourth performance period will begin Jan. 1, 2014.

34. The Medicare Shared Savings Program has two tracks: Track 1, the "one-sided model" that is shared-savings only, and Track 2, the "two-sided" model in which ACOs share in savings and losses.

35. Under Track 1, ACOs that achieve a specified minimum amount of savings can share in up to 50 percent of the savings with CMS. Track 1 ACOs do not take on downside risk for the three-year period.

36. Under Track 2, ACOs that achieve a specified minimum savings can share in up to 60 percent of the savings. If Track 2 ACOs to not meet the specified savings benchmark, they are liable for up to 60 percent of the difference between the benchmark and the actual expenditures for the performance year.

37. For the first performance year in the MSSP, ACOs are paid for reporting on all 33 of the quality measures. This is known as pay-for-reporting.

38. In year two for MSSP participants, more reimbursement is tied to the ACOs' performance. Pay-for-performance applies to 25 of the quality measures, and pay-for-reporting applies to eight (numbers 7, 8, 19, 20, 21, 31, 32, 33).

39. In year three, 32 quality measures are pay-for-performance, and #7 is the only pay for reporting measure.

40. The Advanced Payment Model is a model falling under the Medicare Shared Savings Program. There are currently 35 members participating in the Advanced Payment Model. The model is meant to help small organizations that have less access to capital to participate in the shared savings program.

41. All participating members of the Advanced Payment Model receive three types of payments: (a) an upfront, fixed payment; (b) an upfront, variable payment based on the number of its historically assigned beneficiaries; and (c) a monthly payment, the value of which depends on the number of beneficiaries.

Commercial ACOs

42. Commercial ACOs are very similar to their Medicare cousins, but the commercial insurers generally set their own quality metrics. Risk and length of ACO contracts vary from payer to payer.

43. The major commercial payers in the accountable care space are as follows, according to an August 2013 analysis from Triple Tree:
•    Aetna: 24 ACOs
•    Blue Cross Blue Shield affiliates: at least 39 ACOs across multiple states
•    Cigna: 66 ACOs
•    UnitedHealthcare: value-based contracts with more than 575 hospitals and 1,100 medical groups

44. In 2012, Cigna announced its goal to form 100 collaborative accountable care initiatives, its version of ACOs, by 2014. Cigna established its first CAC initiative in 2008.

45. In June 2013, UnitedHealthcare, the Minnetonka, Minn.-based health insurer subsidiary of United Health Group, announced plans to double its number of accountable care contracts by 2017.

46. Downers Grove, Ill.-based Advocate Health Care has one of the largest commercial ACOs in the country, as it covers roughly 380,000 Blue Cross Blue Shield of Illinois enrollees. It started the ACO in 2010.


47. As of February 2013, 52 percent of Americans live in primary care service areas served by ACOs, compared to just 45 percent in August 2012, according to an Oliver Wyman report.

48. Delaware is the only state without an ACO, according to analysis from Leavitt Partners, although there has been some rustling of ACO activity in the The First State. As of August 2013, Choose Health Delaware, a health reform education program, was planning an ACO

49. When adjusted for population, southern Maine has the most ACOs per capita, according to Leavitt Partners. Texas, Florida and California also have many ACOs.

50. The South, Great Plains and Midwest regions have seen low ACO activities, according to Leavitt Partners.

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