Accountable Care Organizations Explained

In a recent article on Medicare reforms, A Place for Mom examined the three new models being used: Accountable Care Organizations (ACOs), Bundled Payments and Medical Homes. Of these three models, ACOs are receiving the most positive buzz for their potential to improve senior health care.

Accountable Care Organizations Explained

Learn more about accountable care organizations.

What Are ACOs?

Accountable Care Organizations consist of “groups of doctors, hospitals, and other health care providers who agree to share collective accountability for the quality and cost of care delivered to [their] Medicare patients.” Examples of ACO models in use include:

Advance Payment ACO (a subset of MSSP)
Medicare Shared Savings Program (MSSP)
Pioneer ACO

Facts about ACOs:

An ACO is not an insurance plan — It’s a physician-payer partnership model. The health care provider is part of the ACO group and the payer is an organization like Medicare, Medicaid or a private insurer.
ACOs must meet strict standards for quality of care before they receive a bonus payment.
The ACO model rewards health care providers for providing quality care.
The ACO payment is a bonus payment in addition to the regular payment health care providers receive by Medicare, Medicaid or a private insurer.
Seniors participating in an ACO cannot be denied services — As long as the service is covered in the fee-for-service Medicare package and it’s medically necessary. This is contrary to other models where insurers can require pre-approval for some tests or procedures.

How Are ACOs Paid?

ACOs were created as a way to move away from pay-for-service health care, in which some health care providers encourage unnecessary tests, procedures, appointments or treatments in order to maximize profits. As Jenny Gold explains:

“One of the main ways the Affordable Care Act seeks to reduce health care costs is by encouraging doctors, hospitals and other health care providers to form networks that coordinate patient care and become eligible for bonuses when they deliver that care more efficiently.”

The concept behind ACOs is that they receive financial incentives from shared savings (or losses) based on how well they control spending while providing a high quality of care.

How is Quality of Care Measured?

ACOs are measured on sixty-five separate quality metrics across five main areas. The payment ACOs receive is based on their performance in these five areas:

Care coordination
Patient safety
Preventive health care
The health of at-risk and frail elderly populations
The patient and caregiver experience

ACOs and Their Benefits to Seniors

According to Aging Care’s Anne-Marie Botek, ACOs focus on chronic disease management, which is extremely important for seniors. “Aging adults are often plagued by a host of different ailments — ranging from arthritis to Alzheimer’s — that can seriously complicate the care that they need,” Boetek says. “A senior with chronic needs who participates in an ACO can be assigned a nurse or a social worker as their care manager to help them coordinate their care and navigate tricky health decisions.”

Unlike other systems in the Medicare reforms, ACOs act as a safety net to ensure that seniors and other at-risk patients have a team in place to monitor and take responsibility for their health needs. “When you see Medicare patients wandering [among providers], they’re probably lost in the system,” Karen Van Wagner, chief executive officer of North Texas Specialty Physicians, tells Health Affairs‘ Harris Meyer. “Giving them access to a high-quality primary care physician to provide preventive care, and referrals to specialists who manage their chronic conditions, is very well received,” she says.

Henry Chung, M.D., vice president and Chief Medical Officer for the Montefiore Care Management Organization agrees that APOs set the stage for improved coordination of care. “For years, healthcare providers have been asking for nothing to get in the way of their relationship with their patients,” he says.

“ACOs offer the chance for doctors to take direct responsibility for communicating better, improving prescription management, and coordinating activity,” he tells Botek.

Consistent, coordinated care is an extremely important element to supporting long-term senior health. Seniors with dementia and other mental health concerns are in particular need of this holistic approach.

Bridging the Gap to Better Mental Health

Although ACOs are restricted by the payment guidelines set out in Medicare’s fee-for-service plan, health providers like Chung are looking for workarounds to provide seniors with access to mental health care — care that to date isn’t always provided by Medicare due to the associated costs with diagnosing, treating and monitoring illnesses like anxiety and depression.

The work-around often comes in the form of increased training for nurse care managers. “At Montefiore, for example, nurse care managers are being trained to screen seniors for things like depression. If a mental illness is found, they will try to help the elderly adult cope with their symptoms and connect them with additional mental health services,” Botek says.

Should You Support ACOs?

Medicare beneficiaries “may sign up for any type of Medicare Advantage plan, but only those under the fee-for-service model can currently receive care from an ACO,” Botek explains.

For seniors who fall under this category, ACOs are worth considering. However, keep in mind that the model is new and so it will take some time to work out the kinks.

“There is a learning curve for seniors and their doctors, who will need to communicate better, and not only during visits, but between visits,” Chung tells Aging Care.

What thoughts do you have about accountable care organizations? Share your opinions with us in the comments below.

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