Focus Magazine - Spring 2013 - 22

FEATURESTORY

The

s of ACOs

I By Dennis M. Falci and Christine MacAdams

I

Under the
healthcare law,
each ACO
must agree to
manage all the
healthcare needs of
5,000 or more
Medicare
beneficiaries for
a period of at
least three years.

FIGURE 1

22

f the acronym ACO sends a shiver down
your spine – thinking of the Health
Maintenance Organizations of the 1980s –
you’re not alone. Implemented to address
increasing healthcare costs, HMOs were
criticized for being overly restrictive and for
making decisions based on cost alone. While the
ACO model has a similar goal – to curb the
rising cost of healthcare – there are key
differences between this type of organization
and the HMOs of the past.

What Is an ACO?
ACO stands for Accountable Care
Organization. It is a network of health care
providers who agree to work together to share
responsibility for providing coordinated care to a
group of patients. The networks may include
hospitals, primary care physicians, specialty
physicians, nursing care, and outpatient facilities.
That might not sound so unusual, and it isn’t.
Large health-care provider networks have been
around for years. The difference is in how the
ACO is paid for providing services. The
traditional fee-for-service (FFS) reimbursement
system, which essentially means physicians are
paid more money for providing more services, is

becoming a thing of the past. While ACOs
maintain some aspects of the FFS payment
system, they are largely moving toward
compensation based on how well they manage
the health of their entire patient populations, and
how well they contain the cost of doing so.

Where Did They Come From?
If you’re thinking that Health Care Reform
and the Affordable Care Act have something to
do with it, you’re on the right track. In October
2011, the Centers for Medicare & Medicaid
Services (CMS) finalized the rules under the new
healthcare law to help providers coordinate
better care for Medicare patients through ACOs.
They created the Medicare Shared Savings
Program, which rewards ACOs for lowering
costs while meeting performance standards on
quality of care and putting patients first. The
program also includes two modifications:
• A “pioneer” model to help those
organizations who already have experience
offering coordinated, patient-centered care
move more quickly from shared savings to a
population-based (cost per beneficiary per
month) model.
• An advanced payment initiative for new
ACOs to help with upfront costs.
Under the healthcare law, each ACO must
agree to manage all the healthcare needs of 5,000
or more Medicare beneficiaries for a period of at
least three years. With 50 million current
Medicare patients in the United States and more
becoming eligible each year, it’s easy to see why
many providers and institutions are rushing to
get in. It is important to note that while the ACO
is responsible for the care of the patients, those
patients are not restricted from seeking care
outside of the ACO.
The goal for these organizations is to provide
coordinated care so that patients, especially the
chronically ill, can get the care they need without
extra services that they don’t.
FOCUS | SPRING 2013 | www.spbt.org
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Focus Magazine - Spring 2013

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