Timely and appropriate patient care is the hallmark of Accountable Care Organizations (ACOs). ACOs resolve common problems in healthcare delivery including duplication of services, fragmentation among providers, and medical errors. The proliferation of ACOs has been impeded by several barriers related to lack of education and incentives and difficulty with alternative payment models (APMs). Three new ACO models proposed by the American Hospital Association will increase growth in the coming year. The eventual goal to transition towards value-based services models will have a positive impact on performance and raise the chances of steering away from fee-for-service models.
Geography: United States; Focus Area: Performance of Accountable Care Organizations (ACOs)
According to the Centers for Medicare and Medicaid Services, an Accountable Care Organization (ACO) is a group of physicians, healthcare providers, hospitals that voluntarily provides coordinated care to Medicare patients. The goals of ACOs are to ensure that the “right care at the right time” is delivered to patients, and fragmentation between providers, duplication of services and medical errors are prevented (Centers for Medicare & Medicaid Services, 2021). ACOs receive a share in the Medicare savings program by spending wisely and providing high-quality care.
In a report by the Medicare Payment Advisory Commission, four main barriers are associated with ACO implementation, which need to be resolved for the success of the ACO movement. First, beneficiaries need to be educated about the benefits of enrolling with an ACO. Second, ACOs need incentives to manage rising Medicare Part D expenses. Third, the financial incentives of hospitals need to be aligned with those of ACOs (obtaining savings from managing drug costs and hospital care). Fourth, ACOs need to review their payment for physicians rather than continuing to rely on the fee-for-service model, and derive value from alternative payment models (APMs) (Joszt, 2020).
Furthermore, the American Hospital Association, 70,000 care providers, physicians, and hospitals will collaborate and coordinate care for 13.2 million Medicare patients through three ACO models in 2023. Hagland (2023) informs that rolling out these models will raise chances of CMS achieving its goal of all Medicare enrollees entering into ACO to access their provider services. The models proposed by CMS for ACOs are (Hagland, 2023):
- Medicare Shared Savings Program (Shared Savings Program) - largest ACO initiative introduced by ACA with 456 ACOs and 10.9 million beneficiaries in 2023. New policy related to physician fee schedule are likely to increase participation in ACOs during 2024 and the future. The policies are likely to benefit underserved and rural areas, increase beneficiaries, and promote equity.
- Accountable Care Organization Realizing Equity, Access, and Community Health (ACO REACH) Model - aims to improve care quality through care coordination and increasing access to accountable care to the underserved population and home care. In 2023, 132 ACOs have the ACO REACH model with 2.1 million beneficiaries and 131,772 providers. 824 Rural Health Centers, Federally Qualified Health Centers, and Critical Access Hospitals will participate in the ACO REACH model in 2023 to address ethnic and racial disparities.
- Kidney Care Choices (KCC) Model - includes care coordination for stage 4 and 5 kidney disease and end-stage renal disease, increasing access to kidney transplant, delaying onset of dialysis. In 2023, 55% REACH ACOs have a self-reported status as provider organizations. In 2023, the KCC model will have 130 KCC entities, 249,983 beneficiaries, and the participation of 249,983 care providers, accounting for 87% increase in organizations and providers, and 62% increase in beneficiaries when compared to 2022.
Market analysts predict the growth in ACO participation, with further increase in growth by 2024. Greater interest in high risk models such as ACO REACH points at the need for more high-risk options under the Shared Savings program (The Regulatory Review, 2022). Greater participation in Shared Savings is expected as financial risk will be reduced, financial spending will be backed by relevant policies, and investment will be paid back through shared savings. The model will have several improvements including greater oversight, equity, patient protection, and provider governance.
Access to quality health services is still a matter of concern. Fee for service models are still in use and fail to provide adequate care. The value-based structure of ACOs will enable payment to providers based on health outcomes (Muhlestein et al., 2022). Regulatory reform may be required in the areas of developing primary care programs, comprehensive patient-centered care, cost reduction, quality improvement, improving coordination across health care programs, regulating data sharing for ACO coordination, decreasing barriers to rural provider participation, spending dollars for social services integration into ACOs, encouraging practice reform for health system change through state regulatory action, and making amendments to technical requirements for inadvertent noncompliance to facilitate transition to value-based payment models.
In future, the introduction of new models, regulatory reform, will facilitate the transition towards value-based service models. To adapt to the environment, organizations may need transformation in their business models. The involvement of CMS in introducing new program rules and benchmarks, driving adoption and performance, increase positive incentives to move towards value-based models and disincentives to steer away from fee-for-service models.
Keywords
racial disparities, value-based payment models, access, healthcare delivery, care model, community health, value-based healthcare, accountable care, ACOs, care coordination, equity, alternative payment models
References
Centers for Medicare & Medicaid Services. (2021). Accountable Care Organizations (ACOs). www.cms.gov. https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ACO
Hagland, M. (2023). CMS Officials Announce ACO Participation Details, Associations Respond. Healthcare Innovation Group. https://www.hcinnovationgroup.com/policy-value-based-care/accountable-care-organizations-acos/article/21292938/cms-officials-announce-aco-participation-details-associations-respond
Joszt, L. (2020). The Future Success of ACOs Depends on Fixing Current Challenges. The American Journal of Accountable Care, 8(4). https://www.ajmc.com/view/the-future-success-of-acos-depends-on-fixing-current-challenges
Muhlestein, D., Saunders, R. S., Lesle, K. de, Bleser, W. K., & McClellan, M. B. (2022). Growth Of Value-Based Care And Accountable Care Organizations In 2022. Forefront Group. https://doi.org/10.1377/forefront.20221130.22253
The Regulatory Review. (2022). Reforming Accountable Care Organizations. www.theregreview.org. https://www.theregreview.org/2022/07/30/saturday-seminar-reforming-accountable-care-organizations/
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