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MEDICARE APPROVES 89 NEW ACOs WHILE NEW YORK STATE AND PRIVATE PAYERS CONTINUE TO ADOPT ACO-RELATED STRATEGIES
–Federal Government
On July 9th, the U.S. Department of Health and Human Services added 89 new accountable care organizations to its list of entities which have been approved to participate in the Medicare Shared Savings Program. Nine of the 89 new ACOs are in New York State and eight of the nine are physician-owned organizations. This brings the national total of ACOs to 154, covering over 2.4 million Medicare patients.
As participants in the Medicare Shared Savings Program, ACOs will need to demonstrate that they can improve the quality of care provided to a defined population of Medicare beneficiaries while at the same time, doing so at a lower cost to the government. If successful, the ACO will be entitled to share in the cost-savings that result.
In order to demonstrate that the ACO is providing better care, it will report its performance on 33 quality measures relating to care coordination and patient safety; use of appropriate preventive health services; improved care for at-risk populations; and patient and caregiver experience of care.
In announcing the 89 new ACOs that were selected to participate in the Medicare Shared Savings Program, the Centers for Medicare & Medicaid Services explained that participation in an ACO is purely voluntary for providers; that beneficiaries served by ACOs will continue to have free choice about the care they receive and from whom they seek care, without regard to whether a particular provider or supplier is participating in an ACO; and that “studies have shown that better care often costs less, because coordinated care helps to ensure that the patient receives the right care at the right time, partly because patients avoid unnecessary duplication of services and dangerous medical errors.”
–New York State Government
In a related development, the New York State Legislature recently passed legislation intended to “promote and regulate the use of ACOs to deliver an array of health care services for the purpose of improving the quality, coordination and accountability of services provided to patients in New York.” The legislation authorizes the Commissioner of Health to establish criteria for certificates of authority, quality standards for ACOs, reporting requirements, etc. Such regulations are to be consistent, “to the extent practical”, with CMS regulations for accountable care organizations under the Medicare program. In passing this legislation, the Legislature found that “the development of accountable care organizations will reduce health care costs, promote effective allocation of health care resources, and enhance the quality and accessibility of health care.” Governor Cuomo is expected to sign this legislation shortly.
–Private Payors
Many private insurance companies are embracing the same concepts that underscore the Medicare and New York State ACO initiatives and in so doing, are encouraging their participating providers to join them in adopting new payment methodologies that will reduce costs while improving quality of care. For example, UnitedHealthcare, one of the nation’s largest managed care organizations, has posted the following statement on its website:
“UnitedHealthcare is evaluating a variety of value-based contracting strategies to increase quality, reduce medical costs, improve patient outcomes and share risk as well as responsibility for controlling medical cost trend.
UnitedHealthcare considers Accountable Care Organizations (ACOs) to be an important element of its value-based contracting strategy. The goal of value-based contracting is to move the delivery system toward increased collaboration between the health care community and greater emphasis on shared risk accountability for improved outcomes. The transformation of industry-wide payment models is evolving and will require a variety of strategies to suit the needs and diversity of consumers and health care providers in individual communities across the country. UnitedHealthcare is currently pursuing a variety of value-based contracting models from performance based contracting incentives to full capitation.”