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Accountable Care Organizations: What You Need to Know
JACQUELINE FINNEGAN, ESQ
LEGAL COUNSEL
Accountable Care Organizations: What You Need to Know Michael DiFiore, JD According to CMS, US health care expenditures have more than doubled every decade since 1960, with annual spending reaching $2.793 trillion in 2012. That number represents almost one-fifth of our nation’s gross domestic product. But in a system designed to compensate providers on the basis of the number of tests run and procedures done, should an alternative outcome be expected? Providers have been incentivized to provide more, but not necessarily better, care. Accountable care organizations (ACOs) were designed to address the problems inherent in a costbased and volume-based reimbursement model of health care. With an emphasis on preventive care and keeping participants healthy, the goal is to provide health care to participants across a continuum of care and, ultimately, to provide the right care at the right time while reducing unnecessary expenditures and duplication of services. WHAT ARE ACOS?
An ACO can be defined as an integrated health care delivery system that contracts to provide a full continuum of services to a defined patient population with specific reimbursement incentives established for meeting both quality and expense cost targets. The driving force of the ACO model is the provision of tangible, financial benefits to providers who can consistently provide better quality of care at reduced costs. Since the inception of the Patient Protection and Affordable Care Act, more than 360 ACOs have been created, serving 5.3 million Medicare beneficiaries. Each ACO serves a population of at least 5,000
traditional fee-for-service beneficiaries who are assigned to that ACO on the basis of the primary care services the beneficiaries receive from ACO providers. ACOs must agree to participate in the shared savings program for at least 3 years (the agreement period), with any early termination potentially resulting in exclusion from future participation in the program. Each year of the agreement period, an ACO is entitled to share in any savings (or losses) it generates, as long as the ACO satisfies its savings and quality performance requirements. CMS develops a cost benchmark, which is adjusted annually, for each ACO by determining the fee-for-service expenditures for the ACO’s beneficiaries assigned to the ACO. Participation in shared savings or losses will depend not only on the operation of the ACO, but also on the track model the ACO decides to participate in. Track 1 allows an ACO to receive 50% of any shared savings generated in connection with the operation of the ACO while insulating the ACO from sharing in any losses for the first 2 years of the agreement period. ACOs participating in Track 2 are given an increased upside (60% of shared savings), but also are liable for shared losses throughout the entire agreement period. Before receiving any potential shared savings, an ACO must achieve its minimum savings rate (MSR) each year. This means that an ACO must generate savings of at least the MSR as measured against the benchmark established by CMS for the particular ACO. For ACOs on Track 1, CMS uses a sliding scale to establish the MSR,
ª 2014 American College of Radiology 1546-1440/14/$36.00 http://dx.doi.org/10.1016/j.jacr.2014.02.008
which ranges from 3.9% to 2.0% on the basis of the number of beneficiaries assigned to the ACO. Track 2 ACOs have a flat 2% MSR. If an ACO generates savings in excess of the MSR, it may receive a portion of those savings, provided the ACO has met its quality performance score. To assess the quality of care, CMS requires ACOs to track and report patient outcomes and experiences on the basis of specific quality measures in 4 domains: (1) patient and caregiver experience, (2) care coordination and patient safety, (3) preventive health, and (4) at-risk population. For the first year of the agreement period, an ACO is required to completely and accurately report on all quality measures to be eligible to participate in shared savings. Thereafter, CMS sets a minimum attainment level for each domain, and for ACOs to participate in shared savings, they must meet or exceed that level on their reported scores per domain. IMPLICATIONS FOR RADIOLOGISTS
One of the stated purposes of ACOs is to reduce the overall cost of health care for the Medicare program. The easiest way to accomplish that objective is for ACO providers to simply run fewer tests and perform fewer procedures. For radiologists, this approach likely translates into being called on less frequently by primary care physicians (PCPs) and specialists to provide imaging services, thereby becoming a commodity within the ACO model. If reduced to such a role, radiologists run the risk of 1
2 Legal Counsel
being put in a position in which they are unable to significantly contribute to an ACO. A heavy-handed cost-cutting approach is an inherently flawed one; improving the quality of care and patient outcomes is the linchpin of the ACO model. Potential overrestriction of patient care is a short-sighted strategy that will likely undermine any potential long-term success. Therefore, it is incumbent on radiologists to refocus the directives of ACOs away from simply cutting costs and to demonstrate their ability to provide value by collaborating with PCPs and specialists in the initial stages of a consultation. Radiologists are in the best position to determine which tests are clinically appropriate for patients. For example, a study published in JACR in 2010 analyzed the appropriateness of 459 elective outpatient CT and MRI examinations that were ordered by PCPs. The results indicated that roughly 1 in 4 examinations ordered was unnecessary or inappropriate. If such results were replicated in an ACO setting, they could pose a significant threat to the ACO’s ability to participate in shared savings. PCPs and specialists will need tools and guidance to improve the quality of
their imaging decision requests, and that is where radiologists can provide tremendous value. Effective use of imaging in connection with consultations may lead to more accurate diagnoses, and reduce the number of unnecessary referrals to specialists. Correct and efficient imaging also assists PCPs and specialists in initiating appropriate treatment earlier. Better quality of care should translate into a healthier patient population. As a result, this healthier population will likely require fewer medical services in the future, and the dual aim of ACOs (ie, increased quality of care and decreased costs) will be achieved, resulting in further increases in shared savings to ACOs. THE ROLE OF RADIOLOGISTS IN ACOS
Serving a utilization management role seems to be a key to success for radiologists, especially as ACOs become more technologically advanced. Radiologists can be integral in the implementation and use of systems such as decision support systems, which integrate an ACO’s electronic medical records and provide reliable clinical guidance for physicians to order the most appropriate tests on the basis of
criteria and protocols published by various medical societies, as well as evidence-based data sets. ACO radiologists could establish the standards for appropriate ordering of imaging services for the entire ACO, which would curtail the frequency of unnecessary imaging. They could also use decision support systems to monitor the actual tests ordered by ACO physicians to determine which orders were noncompliant with ACO standards and report back to the ACO managing staff on a periodic basis. Such oversight provides the ACO with an opportunity to address and correct inefficient ordering and spending before it becomes a larger problem. Radiologists have the skills necessary to become driving forces in the ACO community. Their knowledge of the clinically appropriate use of imaging services can generate significant savings for ACOs. The determining factor, however, will be how proactive radiologists are in having their voices heard by ACO leadership. If they fail to demonstrate the value they can add in an ACO model, they may be relegated simply to a commoditized role, which would work to the disadvantage of radiologists particularly, and ACO participants at large.
Michael DiFiore, JD, is from Garfunkel, Wild, PC, Great Neck, New York. Jacqueline Finnegan, Esq, Garfunkel, Wild, PC, 111 Great Neck Road, Great Neck, NY 11021; e-mail: jfinnegan@ garfunkelwild.com.
LEGAL COUNSEL
Accountable Care Organizations: What You Need to Know Michael DiFiore, JD According to CMS, US health care expenditures have more than doubled every decade since 1960, with annual spending reaching $2.793 trillion in 2012. That number represents almost one-fifth of our nation’s gross domestic product. But in a system designed to compensate providers on the basis of the number of tests run and procedures done, should an alternative outcome be expected? Providers have been incentivized to provide more, but not necessarily better, care. Accountable care organizations (ACOs) were designed to address the problems inherent in a costbased and volume-based reimbursement model of health care. With an emphasis on preventive care and keeping participants healthy, the goal is to provide health care to participants across a continuum of care and, ultimately, to provide the right care at the right time while reducing unnecessary expenditures and duplication of services. WHAT ARE ACOS?
An ACO can be defined as an integrated health care delivery system that contracts to provide a full continuum of services to a defined patient population with specific reimbursement incentives established for meeting both quality and expense cost targets. The driving force of the ACO model is the provision of tangible, financial benefits to providers who can consistently provide better quality of care at reduced costs. Since the inception of the Patient Protection and Affordable Care Act, more than 360 ACOs have been created, serving 5.3 million Medicare beneficiaries. Each ACO serves a population of at least 5,000
traditional fee-for-service beneficiaries who are assigned to that ACO on the basis of the primary care services the beneficiaries receive from ACO providers. ACOs must agree to participate in the shared savings program for at least 3 years (the agreement period), with any early termination potentially resulting in exclusion from future participation in the program. Each year of the agreement period, an ACO is entitled to share in any savings (or losses) it generates, as long as the ACO satisfies its savings and quality performance requirements. CMS develops a cost benchmark, which is adjusted annually, for each ACO by determining the fee-for-service expenditures for the ACO’s beneficiaries assigned to the ACO. Participation in shared savings or losses will depend not only on the operation of the ACO, but also on the track model the ACO decides to participate in. Track 1 allows an ACO to receive 50% of any shared savings generated in connection with the operation of the ACO while insulating the ACO from sharing in any losses for the first 2 years of the agreement period. ACOs participating in Track 2 are given an increased upside (60% of shared savings), but also are liable for shared losses throughout the entire agreement period. Before receiving any potential shared savings, an ACO must achieve its minimum savings rate (MSR) each year. This means that an ACO must generate savings of at least the MSR as measured against the benchmark established by CMS for the particular ACO. For ACOs on Track 1, CMS uses a sliding scale to establish the MSR,
ª 2014 American College of Radiology 1546-1440/14/$36.00 http://dx.doi.org/10.1016/j.jacr.2014.02.008
which ranges from 3.9% to 2.0% on the basis of the number of beneficiaries assigned to the ACO. Track 2 ACOs have a flat 2% MSR. If an ACO generates savings in excess of the MSR, it may receive a portion of those savings, provided the ACO has met its quality performance score. To assess the quality of care, CMS requires ACOs to track and report patient outcomes and experiences on the basis of specific quality measures in 4 domains: (1) patient and caregiver experience, (2) care coordination and patient safety, (3) preventive health, and (4) at-risk population. For the first year of the agreement period, an ACO is required to completely and accurately report on all quality measures to be eligible to participate in shared savings. Thereafter, CMS sets a minimum attainment level for each domain, and for ACOs to participate in shared savings, they must meet or exceed that level on their reported scores per domain. IMPLICATIONS FOR RADIOLOGISTS
One of the stated purposes of ACOs is to reduce the overall cost of health care for the Medicare program. The easiest way to accomplish that objective is for ACO providers to simply run fewer tests and perform fewer procedures. For radiologists, this approach likely translates into being called on less frequently by primary care physicians (PCPs) and specialists to provide imaging services, thereby becoming a commodity within the ACO model. If reduced to such a role, radiologists run the risk of 1
2 Legal Counsel
being put in a position in which they are unable to significantly contribute to an ACO. A heavy-handed cost-cutting approach is an inherently flawed one; improving the quality of care and patient outcomes is the linchpin of the ACO model. Potential overrestriction of patient care is a short-sighted strategy that will likely undermine any potential long-term success. Therefore, it is incumbent on radiologists to refocus the directives of ACOs away from simply cutting costs and to demonstrate their ability to provide value by collaborating with PCPs and specialists in the initial stages of a consultation. Radiologists are in the best position to determine which tests are clinically appropriate for patients. For example, a study published in JACR in 2010 analyzed the appropriateness of 459 elective outpatient CT and MRI examinations that were ordered by PCPs. The results indicated that roughly 1 in 4 examinations ordered was unnecessary or inappropriate. If such results were replicated in an ACO setting, they could pose a significant threat to the ACO’s ability to participate in shared savings. PCPs and specialists will need tools and guidance to improve the quality of
their imaging decision requests, and that is where radiologists can provide tremendous value. Effective use of imaging in connection with consultations may lead to more accurate diagnoses, and reduce the number of unnecessary referrals to specialists. Correct and efficient imaging also assists PCPs and specialists in initiating appropriate treatment earlier. Better quality of care should translate into a healthier patient population. As a result, this healthier population will likely require fewer medical services in the future, and the dual aim of ACOs (ie, increased quality of care and decreased costs) will be achieved, resulting in further increases in shared savings to ACOs. THE ROLE OF RADIOLOGISTS IN ACOS
Serving a utilization management role seems to be a key to success for radiologists, especially as ACOs become more technologically advanced. Radiologists can be integral in the implementation and use of systems such as decision support systems, which integrate an ACO’s electronic medical records and provide reliable clinical guidance for physicians to order the most appropriate tests on the basis of
criteria and protocols published by various medical societies, as well as evidence-based data sets. ACO radiologists could establish the standards for appropriate ordering of imaging services for the entire ACO, which would curtail the frequency of unnecessary imaging. They could also use decision support systems to monitor the actual tests ordered by ACO physicians to determine which orders were noncompliant with ACO standards and report back to the ACO managing staff on a periodic basis. Such oversight provides the ACO with an opportunity to address and correct inefficient ordering and spending before it becomes a larger problem. Radiologists have the skills necessary to become driving forces in the ACO community. Their knowledge of the clinically appropriate use of imaging services can generate significant savings for ACOs. The determining factor, however, will be how proactive radiologists are in having their voices heard by ACO leadership. If they fail to demonstrate the value they can add in an ACO model, they may be relegated simply to a commoditized role, which would work to the disadvantage of radiologists particularly, and ACO participants at large.
Michael DiFiore, JD, is from Garfunkel, Wild, PC, Great Neck, New York. Jacqueline Finnegan, Esq, Garfunkel, Wild, PC, 111 Great Neck Road, Great Neck, NY 11021; e-mail: jfinnegan@ garfunkelwild.com.