ACO–A New Model in Health Care Savings Becomes Law

STS News, Winter 2012 -- On Oct. 20, CMS published a final rule implementing provisions of the Affordable Care Act (ACA) to create Accountable Care Organizations (ACOs). STS Government Relations efforts and STS member involvement continue as this new model for proposed health care savings evolves.

ACOs represent a new model of health care delivery that focuses on care coordination and cost savings. They are intended to encompass the full continuum of care, with the goal of encouraging health care providers to take collaborative responsibility for patients’ overall wellbeing, as opposed to just a single outcome of an intervention. Savings generated by an ACO would be shared between CMS and the ACO, with the latter distributing its portion of the savings among the participating health care providers within the ACO.

In June 2011, STS submitted a comment letter to CMS in response to the proposed ACO regulations.* While the letter expressed support for CMS’s quality-improvement and cost-savings efforts, it also outlined STS concerns with the proposed ACO model.

The STS comment letter noted that the proposed rule would limit the ability of cardiothoracic surgeons and other specialists to positively affect health care outcomes, providing little or no incentive for specialists to participate in the ACO model. It further stated that the ACO concept would fail “to encompass the provision of care for uncommon but resource intensive conditions – such as the management of congenital heart disease, the use of ventricular assist devices, transplantation for end stage heart or lung failure, and the management of uncommon thoracic malignancies – without unnecessary duplication of technology and degradation of the quality of care for these conditions.”

The STS comment letter also highlighted that CMS had failed to articulate how shared savings would flow from participating hospitals to participating physicians under a properly structured ACO, and expressed concern that CMS did not include any cardiothoracic surgery measures or registry-based reporting among the 65 proposed ACO quality measures.

ACO Final Rule
In the final rule issued on Oct. 20, CMS made a number of notable revisions to the proposed ACO model, some of which address STS’s expressed concerns.

Under the ACO program, groups of providers can enter into a three-year contract with CMS to share up to 10 percent of achieved savings over baseline Medicare spending. Participants can choose from two ACO models or tracks. Under Track One, the ACO will assume no downside risk, even if it fails to achieve savings. Track Two allows ACOs with resources to assume some risk and receive an increased share of the savings they accrue. In addition, specialists are not confined to participation in one ACO exclusively, allowing Medicare beneficiaries broader access to specialists’ services.

The final rule calls for all participating ACOs to comply with 33 quality measures, as opposed to the originally proposed 65 measures. None of the 33 measures are relevant to cardiothoracic surgery, nor do they call for registry-based reporting, such as that in the STS National Database. However, one quality measure does provide for the meaningful use of electronic health records at some point in the future.

Beneficiaries will be assigned to ACOs in one of two ways. Patients can be assigned to the primary care physician who has provided the majority of their care. Those who do not have a primary care provider will be assigned to a physician if they a) did not receive any services from a primary care provider and b) received at least one primary care service from that physician (any specialty type) and/or any physician assistant or nurse practitioner working in conjunction with that physician.

CMS also created an advance payment model that is intended to evaluate whether early payment of shared savings will increase participation among providers and/or increase the speed in which an ACO can generate savings.

ACOs may qualify for the advance payment model, if they include inpatient facilities that have less than $50 million in total annual revenue, or if they include critical access hospitals or Medicare low-volume rural hospitals and have less than $80 million in total revenue. ACOs that qualify for the advance payment option may receive an upfront, fixed payment; an upfront variable payment based on the number of Medicare beneficiaries served; or a monthly, variable payment based on the number of Medicare beneficiaries served.

In the final rule, CMS acknowledged STS’s concern about uncommon, resource-intensive services and the effect they can have on an ACO’s bottom line. However, the final rule ultimately did not go far enough to protect ACOs from suffering the negative effects of clinical situations that are beyond a physician’s control. CMS has proposed adjusting the ACO risk assessments to take into account changes in the ACO patient populations’ severity and case mix, instead of restricting growth to zero percent in risk adjustments during the term of the ACO agreement. CMS has also stated that its proposal to truncate claims at the 99th percentile, along with the opportunity for providers to receive shared savings, will help ensure that ACOs do not avoid treating at-risk beneficiaries.

ACOs are intended to grow organically, as providers join together and submit applications to CMS. STS members engaging in the ACO process are encouraged to stay in contact with the STS Government Relations staff and provide feedback regarding their experiences. If STS can provide any additional guidance or assistance, please contact STS Government Relations Director Phil Bongiorno at (202) 787-1221 or pbongiorno [at] sts [dot] org.

*See the June 2011 issue of STS Beltway Briefings for more information.