Six Reasons Why the Time is Right for a Medicare ACO

May 1, 2017 Seth Edwards

In the last five years, the country has experienced incredible growth in Medicare accountable care organizations (ACOs), as the healthcare industry inevitably moves toward value-based payment and care delivery models. Between the Medicare Shared Savings Program (MSSP), the Next Generation ACO model and other shared savings initiatives, the Centers for Medicare & Medicaid Services (CMS) estimates that more than 12.3 million Medicare and/or Medicaid beneficiaries are served by an ACO.

Solidifying the growth of ACOs and other value-based payment models is the implementation of the physician payment segment of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), which is called the Quality Payment Program  (QPP).

The QPP represents an inflection point in healthcare for clinicians, hospitals and health systems, placing significant revenue at stake and incentivizing assumption of risk under alternative payment models, such as ACOs. This value-based paradigm creates opportunities for health systems to enter into new, integrated arrangements with independent clinicians. Value-based payment arrangements like these are already paying off with Medicare ACOs saving nearly $1.3 billion since 2012, while simultaneously improving quality.

Though the industry is moving in this direction, some providers are uncertain about when they should begin building value-based payment models. What many don’t know is that MACRA’s QPP and Medicare ACOs are well-aligned.

Under the QPP, clinicians have the ability to participate in either the Merit-based Incentive Payment System (MIPS) or an Advanced Alternative Payment Model (APM). MIPS is essentially a value-based payment model that provides for a bonus or penalty depending on performance in four categories – quality, cost, improvement activities and advancing care information. Because participating in an Advanced APM requires accepting a large amount of actuarial risk (meaning few clinicians will qualify), CMS has created a third track that combines the MIPS and APM options and includes a Medicare ACO, such as MSSP Track 1. That’s why now is the right time to engage in a Medicare ACO – plus, there’s no downside risk involved.

Breaking It Down: Six Reasons Why a Medicare ACO is Right For You

  1. MACRA reporting through a Medicare ACO reduces administrative burden and provides preferential scoring across each of the reporting categories: Medicare ACOs provide a reporting vehicle that can be used for the majority of the medical staff and independent/community physicians, advantageous scoring and reduced administrative burden available for the MIPS-APM option.
  2. Test and gain experience from a value-based payment model without taking actuarial down-side risk: MSSP Track 1 allows organizations to participate in a Medicare ACO program without accepting downside risk for at least six years. This model provides an opportunity for ACOs to gain experience and share in savings generated, without being responsible for losses.
  3. Position your organization for future success in a value-based payment environment: Medicare ACOs provide no downside financial risk opportunities to develop capabilities and gain experience managing value-based agreements that can be applied across all payers.
  4. Partner with physicians before a disruptor enters the market: Many disruptive organizations are entering into markets with the goal of financing and organizing primary care providers to develop ACOs. These groups are a threat because they leave the health systems out of the ACO. Furthermore, they view the health system as a cost center and do not share in any savings generated.
  5. Access to Part A, B and D claims data: Medicare ACOs have access to an unprecedented amount of data, which can be used to manage patient populations, track performance and identify opportunities for success under other value-based programs. Use this data to identify potential gains in market share and out-of-network utilization/leakage.
  6. Broad fraud and abuse waivers: Medicare ACOs have an opportunity to utilize broad waivers of rules related to Stark/anti-kickback, antitrust and civil monetary penalty rules, which allow for innovative relationship with physicians.

With all the advantages of a Medicare ACO and no downside risk involved, now is the time to join other industry leaders and position your organization for success. But deadlines are looming. If you’re even considering becoming a participant, you must send CMS a notice of intent to apply by Wednesday, May 31.

Listen to our webinar recording to learn more about the benefits of a Medicare ACO, including how to apply and proven keys to success from Banner Health. Download our whitepaper for more on the MIPS-APM option and how it aligns with MSSP Track 1.

Author information

Seth Edwards

Seth Edwards

Manager, federal affairs at Premier, Inc.

I’m the Principal Performance Partner of Population Health at Premier Inc. I support Premier’s Population Health Management Collaborative members in building shared savings and alternative payment model capabilities. When I’m not working you’ll find me watching Manchester City football club, playing guitar or reading non-fiction. Connect with me on LinkedIn.


The post Six Reasons Why the Time is Right for a Medicare ACO appeared first on Action For Better Healthcare.

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