AMA Proposes Four ACO Payment Systems in Addition to Shared Savings

In a recent letter to CMS covering a variety of implementation issues for accountable care organizations, the AMA proposed four payment systems for ACOs in addition to the shared savings approach, based on fee-for-service payments, that was outlined in the healthcare reform law.

1. Partial capitation. The ACO would agree to accept a pre-defined monthly payment for each patient that would cover all costs of care. The payment would be below the fee-for-service amount paid for those patients. The AMA said this model would be useful for practices that have successfully managed capitated contracts for Medicare Advantage and commercial payors. The Center for Healthcare Quality and Payment Reform has developed a detailed description of how this model could be implemented.

2. Virtual partial capitation. Instead of providing upfront payments, this approach would set a per-patient budget for a defined patient group. Each provider would bill for individual services, total billings would be compared to the budget and payments would be adjusted up or down to stay within the budget. The AMA suggested implementing two additional transitional payment models to allow primary care and specialty practices "to transition to more accountable care delivery."

3. Accountable medical home payment. In this model, primary care practices or physician organizations could improve care and achieve savings in specific areas of care without being penalized for costs of specialized services they can’t control. The physician groups would get "upfront resources" to restructure the way primary care is delivered. In return, they would commit to reducing inappropriate ED utilization, hospital admissions and readmissions, and use of high-tech diagnostic imaging. The Puget Sound Health Alliance and the Washington State Health Care Authority are planning to enact this model for commercial payers and Medicaid plans next year.

4. Condition-specific capitation. Physicians — particularly a specialty practice or physician organization — would receive capitated payments to treat a particular condition or set of conditions in a patient population. The specialty group would get these condition-specific payments even if care were received at another provider. For example, the group would be paid for all services associated with congestive heart failure, including hospital care and rehabilitation. "This would enable primary care and specialty physician practices to work together to take accountability for the subset of patients and patient care they felt they could most effectively manage," the AMA stated. The model could also be restructured into virtual partial capitation or expanded to include additional types of patients.

Implementing payment models
The AMA urged CMS to clearly define criteria for participation in these models in advance, allow all eligible providers to participate, and avoid structural requirements or major capital investments that cut out small practices. The AMA advised against setting "arbitrary limits" on the number of providers participating in a payment model structured to assure budget neutrality. It also said participation in these models should be allowed even in geographic areas where other CMS demonstrations are implemented.

Read the AMA letter to CMS on ACOs (pdf).

Read more coverage on ACO payments.

- Capitation Option Exposes ACOs to Risk of Losing Money

- 15 Suggestions for Implementing ACOs from New AHA Letter to CMS

- CMS Launches Innovation Center, 3 New Demonstrations

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