In the proposed rule, CMS describes two methods for distributing potential shared savings to ACOs. The first model includes
one-sided risk sharing. In this scenario, the ACO would share in
any cost savings but would not be required to pay a penalty for
any increased cost of care.
CMS proposed this option to encourage participation from
ACOs that are beginning to implement risk models and may be
unwilling to commit to loss sharing immediately. However, loss
sharing becomes mandatory in the third year of the program.
The second model implements two-sided risk sharing. In the
two-sided model, the ACO would share in both the savings and
the burden of any increased cost of care for their population.
The two-sided model offers a higher share in the savings than
the one-sided model.
ACOs that have experience in risk contracting either in a physician hospital organization or through managing capitated
contracts may opt to be paid via the two-sided model for the entire three-year period.
To achieve additional payment, ACOs must attain quality and
performance benchmarks in addition to demonstrating per-beneficiary savings. The maximum sharing percentage is 60
percent in the two-sided model and 50 percent in the one-sided
model. The proposed cap on the shared loss is 5 percent of the
benchmark cost in the first year, 7. 5 percent in the second year,
and 10 percent in the third year.
CMS does not state a preferred method for distributing shared
savings to the providers participating in an ACO. It is likely that
the ACO will be responsible for distributing any incentive payments throughout the organization. Many physician hospital
organizations already have incentive arrangements in place. It
is likely that those would be expanded to include the distribution of any Medicare incentive payments.
Emphasis on Quality and Efficiency
One of the primary features of the ACO program is the emphasis
on the quality and efficiency of the care provided. This is in contrast to the current healthcare model, where payment is often
based on quantity of services and not on the delivery of the right
care at the right time.
Leveraging principles developed by the Institute of Medicine’s
report “Crossing the Quality Chasm: A New Health System for
the 21st Century” and the National Partnership for Women and
Families, CMS is focused on integrating patient-centered care in
the development of ACOs. As such, ACOs must meet the follow-
ing patient-centered criteria:
of their population
x Systems in place to identify high-risk individuals and pro-
cesses to develop individualized care plans for targeted
x A mechanism in place for the coordination of care (e.g.,
use of enabling technologies or care coordinators)
x An established process for communicating clinical
knowledge or evidence-based medicine to beneficiaries
in a way that is understandable to them
x Written standards in place for beneficiary access and
communication and a process in place for beneficiaries to
access their medical record
x Exisiting internal processes that measure clinical or ser-
vice performance by physicians across the practices and
use these results to improve care and service over time. 2
Quality and efficiency are relatively difficult to measure with
the current limitations in organizations’ IT structures. The measurement of outcome and process depends on collecting more
than payment method-driven billing data.
The meaningful use requirements released by CMS are designed to support the capture and analysis of more robust clinical data elements that ideally will support quality and efficiency
ACO Participation Considerations
The program and the development of ACOs will have a direct
effect on the healthcare industry and the HIM domain. Healthcare organizations will consider the following issues when deciding whether to participate in the program.
Coding, Revenue Cycle, and Payment
In traditional FFS payment plans, capturing the appropriate
diagnosis and procedure codes affects an organization’s reimbursement. As the payment methods migrate away from FFS,
the focus of coding shifts to diagnosis and procedural indices in
order to accurately identify patient populations.
Coded data facilitate identification of the patient population
and allow for the creation of registries. ACOs that understand
their patient populations are better prepared to manage the resources and derive patient-centered services.
Even though the payment method is different in an ACO
model, revenue cycle management remains a vital function.
Monitoring reimbursements in the program creates challenges
as payment methods become more complex in calculation and
distribution across providers. Understanding the ACO payment
method is an important first step.
One risk in the proposed models for distributing shared savings is an ACO’s ability to estimate and control the cost of care
it delivers to its subscribers. Patient registries are one effective
strategy for tracking patient risk factors and problem lists. Registries will be so critical to the success of an ACO that organiza-