ACO manifesto: 75 things to know about accountable care organizations

As accountable care organizations are a new model of care, formally created by the Patient Protection and Affordable Care Act in 2010, they are constantly evolving and changing.Much has changed even in a year's time. That is why Becker's Hospital Review has provided this new ACO manifesto, an updated version of the 2013 edition.

Topics include ACO basics, terminology, specifics about Medicare and Medicaid ACOs, ACOs by the numbers as well as the close relationship between health IT and ACOs.

To learn more about individual ACOs, read the 2014 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.

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. 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.

ACOs by the numbers
9. The number of ACOs in the United States now exceeds 600. A May 2014 analysis from Leavitt Partners identified 626 ACOs around the country.

10. The total number of ACO-covered lives sits at approximately 20.5 million as of June 2014, according to Leavitt Partners. This included the 5.3 million patients enrolled in the Medicare Shared Savings and Pioneer Programs, with the remaining 14 million lives divided between commercial contracts and Medicaid ACO programs.

11. Besides covered lives, another way to measure the number of people affected by ACOs is to count the number of patients served by providers participating in an ACO. Though the provider is not actually at risk for the majority of these patients, there is the possibility that all patients will benefit from the organization's participation in accountable care. Using this method, researchers at Oliver Wyman calculated that ACOs served between 46 and 52 million patients as of April 2014.

12. As of September 2014, Medicare ACOs represent approximately 60 percent of all ACOs. More than 360 Medicare ACOs have been established since the enactment of the Patient Protection and Affordable Care Act, according to CMS.

13. Out of 1,183 physician practices surveyed, 35 percent have already joined an ACO or plan to join one soon, while 60 percent have not joined an ACO and have no plans of joining one, according to a March 2014 study published in Health Services Research.

14. One challenge ACOs face is often referred to as "stickiness," i.e., how do ACOs ensure patients visit providers within the group or practice? This has proven especially challenging with specialists. Among ACO-assigned beneficiaries, 8.7 percent of office visits with primary care physicians and 66.7 percent of office visits with specialists were provided outside of the assigned ACO, meaning many beneficiaries assigned to an ACO left it for specialty care, according to a study published in JAMA Internal Care.

Terminology: Words and phrases associated with ACOs
15. 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.

16. 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.

17. 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 healthcare continuum.

18. There is also continued discussion about population health and its relationship to public health and policy. Some in academia and healthcare promote the idea that population health involves not only healthcare providers, but a range of institutions that affect the societal determinants of one's health.

19. 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.

20. 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.

21. 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.

22. The concept of pay-for-performance goes by many names, including pay-for-valuevalue-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, but rather for improving patients' outcomes and healthy behaviors.
Medicare ACOs

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

24. HHS proposed its initial set of rules for ACOs in March 2011. HHS released the final rule in October 2011. 

25. 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.

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

27. 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.

28. In those four domains, there are 33 quality measures 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 contro
  • 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

29. As part of the anticipated 2015 Physician Fee Schedule, CMS has proposed changes to the quality measures used to assess ACOs. The changes include retiring eight measures that "have not kept up with clinical best practice, are redundant with other measures that make up the quality reporting standard, or that could be replaced by similar measures that are appropriate for ACO quality reporting." The proposed changes would also add new measures, bringing the total number of quality measures to 37.

30. Even though surgical care accounts for roughly half of hospital expenditures, Medicare's initial ACOs have emphasized that aspect of care relatively little, with only 10 percent ranking reducing unnecessary surgery as a high or very high priority, according to a study published in Health Affairs
Medicare's Pioneer ACO Program

31. 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. CMS announced the original 32 Pioneer ACOs in December 2011. The first performance period for the Pioneers began Jan. 1, 2012.

32. 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.

33. 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 from Medicare. They must also negotiate outcomes-based contracts with other payers by the end of the second performance year.

34. In 2012, 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.

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

36. In August 2014, ACO pioneer San Diego-based Sharp Healthcare dropped out of the program.

37. Three more Pioneer ACOs announced their departure in September 2014, shortly after performance year two results were announced. These include Flint, Mich.-based Genesys Physician Hospital Organization, Mishawaka, Ind.-based Franciscan Alliance, and Wayne, Pa.-based Renaissance Health Network. Genesys and Franciscan Alliance both plan to move into the shared savings program.

38. The 19 remaining Pioneer ACOs are as follows:

  • Minneapolis-based Allina Hospitals and Clinics
  • Newton, Mass.-based Atrius Health
  • Phoenix-based Banner Health Network
  • Green Bay, Wis.-based Bellin-ThedaCare Healthcare Partners
  • Westwood, Mass.-based Beth Israel Deaconess Care Organization
  • New York City-based Montefiore ACO
  • San Francisco-based Brown & Toland Physicians  
  • Lebanon, N.H.-based Dartmouth-Hitchcock ACO
  • Brewer, Maine-based Beacon Health
  • Minneapolis-based Fairview Health Services
  • Northridge, Calif.-based Heritage California ACO
  • Detroit-based Michigan Pioneer ACO
  • Irvine, Calif.-based Monarch Healthcare
  • Mount Auburn Cambridge (Mass.) Independent Practice Association
  • Peoria, Ill.-based OSF Healthcare System
  • Minneapolis-based Park Nicollet Health Services
  • Boston-based Partners HealthCare
  • Boston-based Steward Promise
  • Fort Dodge, Iowa-based Trinity Pioneer ACO

39. In their second performance year, 11 pioneer ACOs earned shared savings, 3 generated shared losses and 3 elected to defer reconciliation until after the completion of the third performance year, according to CMS.

40. Performance evaluations of ACOs in the Pioneer program revealed Pioneer ACOs generated estimated total savings of more than $96 million and saved the Medicare Trust Fund approximately $41 million in their second performance year.

41. Additionally, CMS evaluations showed Pioneer ACOs in year two achieved lower per capita growth in spending for the Medicare program at 1.4 percent, about 0.45 percent lower than Medicare fee-for-service.

42. During year two, the mean quality score among Pioneer ACOs showed a 19 percent increase. Of the 33 quality measures, the Pioneer ACOs showed improvement in 28 with average improvements of 14.8 percent across all quality measures.

43. In a proposed rule for the Medicare program, CMS proposed a revision of section 425.502(b) to add a new paragraph (b)(4)(i) stating the appropriate number of years that a benchmark should apply before it is updated is two years. CMS stated it considered the suggestions of ACOs that there be a longer period of time to gain experience with the performance measure before benchmarks are updated, and benchmarks remain unchanged for additional performance years to provide ACOs with stable targets for measuring quality achievement. The proposed updated benchmarks would apply for the 2016 and 2017 performance years.
Medicare Shared Savings Program

44. 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.

45. CMS announced the first 27 MSSP ACOs in April 2012. The first performance period began April 1, 2012.
46. CMS announced 88 more MSSP ACOs in July 2012. The second performance period began July 1, 2012.
47. CMS announced another 106 MSSP ACOs in January 2013. The third performance period began Jan. 1, 2013.

48. CMS announced the 123 new ACOs joining the 2014 class of MSSP ACOs Dec. 23, 2013. The fourth performance period began Jan. 1, 2014.

49. The MSSP 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.

50. 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.

51. Under Track 2, ACOs that achieve a specified minimum savings can share in up to 60 percent of the savings. If Track 2 ACOs do 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.

52. 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.

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

54. In year three, 32 quality measures are pay-for-performance, and No.7 (CAHPS: Health status/functional status) is the only pay for reporting measure.

55. In performance year one, MSSP ACOs that joined with April 2012 and July 2012 start dates held spending to $652 million below their targets and earned more than $300 million as their share of program savings in performance year one, according to CMS evaluations. Additionally, those MSSP ACOs saved the Medicare Trust Fund an estimated $345 million in performance year one.

56. Out of 33 quality measures, the MSSP ACOs improved on 30, including measures on screening for high blood pressure and clinicians' communication, in year one.

57. The Advanced Payment Model falls under the MSSP. There are currently 35 members participating in the Advanced Payment Model, which is meant to help small organizations that have less access to capital to participate in the MSSP.

58. 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.
Medicaid accountable care efforts

59. Medicaid accountable care initiatives, which go by different names depending on the state, are not the same thing as managed Medicaid. Instead, they generally take a broader approach to patient care by focusing on population health and integrating mental health, chemical dependency and dental services, according to Leavitt Partners.

60. So far, 19 states have moved toward the formation of Medicaid ACOs, including Alabama, Arkansas, California, Colorado, Connecticut, Hawaii, Illinois, Iowa, Maine, Massachusetts, Minnesota, New Jersey, New York, North Carolina, Oregon, Texas, Utah, Vermont and Washington.

61. States can develop Medicaid ACO programs using state plan amendments or Medicaid waivers, according to a Medicaid/CHIP issue brief published in June 2013 by Families USA. CMS released letters to multiple state Medicaid directors with guidance on how states can implement ACOs in their Medicaid programs. The PPACA also permitted limited demonstrations that allow states to test Medicaid Pediatric ACOs from 2012 to 2016.

62. Of the implemented Medicaid ACO initiatives, Utah, Colorado, and Oregon have the most mature programs, covering approximately 2.1 million lives together, according to a June 2014 Leavitt Partners report.

63. Oregon is leader in Medicaid ACOs with a total of 16 Coordinated Care Organizations covering more than 750,000 lives, according to Leavitt Partners. Oregon's CCOs incorporated patient-centered and team-focused care delivery systems that encourage more advanced coordination. With a focus on prevention, chronic disease management and patient-centered medicine, Oregon reduced its emergency department visits by 13 percent between 2011 and 2014. Hospital admissions for congestive heart failure were reduced by 32 percent, chronic obstructive pulmonary disease was reduced by 36 percent and adult asthma by 18 percent during the given time period.

Commercial ACOs
64. 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.

65. Commercial payers with the largest share of accountable care contracts are the following, according to Leavitt Partners: Cigna (19 percent), Aetna (9.1 percent), United (4 percent), Blue Shield of California (3.7 percent) and the Oregon Health Plan (3.7 percent).

66. Of commercial accountable care contracts, self-insured employers make up 2.8 percent.

67. The rest of the commercial payers participating in accountable care have contracts with just one or two ACOs, according to Leavitt Partners.

68. In 2012, Cigna announced its goal to form 100 collaborative accountable care initiatives, its version of ACOs, by 2014. Cigna has since accomplished that goal, now boasting 105 collaborative care arrangements in 27 states, covering more than 1.1 million commercial customers. Cigna established its first CAC initiative in 2008.

69. As of April 2014, more than two-thirds of Americans live in localities served by an ACO and more than 40 percent live in areas served by two or more ACOs, according to an Oliver Wyman report. This number has increased since 2013 when only about half of Americans live in primary care service areas served by ACOs.

70. Areas of high population density — including Southern California, Texas and across the Northeast — have seen considerable ACO growth while activity remains low in the South and Midwest regions, according to a June 2014 Leavitt Partners report.
ACOs & health IT

71. Health IT generally helps ACOs achieve their clinical and population health goals, though issues with interoperability between data sources prevent ACOs from reaping the full benefits of the technology.

72. Sixty-six percent of ACOs said technology improved care quality, 63 percent said it improved preventive screening and vaccination rates, 59 percent said it improved chronic disease management and 55 percent said it improved overall health outcomes, according to a Premier survey of 62 ACOs conducted between July and August 2014.

73. All 62 ACOs included in Premier's survey reported identifying at least some trouble combining data from different sources, and 88 percent said these integration obstacles are "significant."

74. A bill proposed in September aims to provide additional incentives for accountable care organization success and includes several provisions that would allow ACOs to expand their telemedicine efforts.

75. The bill is sponsored by Diane Black (R-Tenn.) and Peter Welch (D-Vt.). Under the bill, ACOs that have adopted a two-sided risk model can elect to have the limitations on the originating site as well as the use of store-and-forward technologies not apply. Additionally, the bill would allow ACOs to engage in remote patient monitoring to improve tracking of high-risk patients.


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