AHA: ACOs may cost more than CMS realizes
Kickstarting an accountable care organization (ACO) could cost more than the Centers for Medicare & Medicare Services (CMS) anticipates, according to a study prepared for the American Hospital Association (AHA).
“This analysis indicates that the organization investment required to put in place and sustain the elements necessary for success is considerably higher—$11.6 million to $26.1 million—than the $1.8 million estimated by CMS in its proposed rule for startup and one year of operating expenses,” the AHA stated. The association made its comments in a May 13 letter to Donald Berwick, MD, administrator of CMS.
The study, prepared by McManus Consulting of Greenwood Village, Colo., identified 23 capabilities that must be developed across four categories to achieve the desired transformation in care delivery:
The information gathered from four case studies was used to create two hypothetical examples to estimate the startup and ongoing costs of establishing an ACO. The first represented a single free-standing hospital, 80 primary care physicians and 250 specialists; the second example included a five-hospital (1,200-bed) system, 250 primary care physicians and 500 specialists.
The study was based on a series of case studies of organizations that have already taken steps to manage the care of a defined population in a manner similar to that of an ACO. However, this work was completed prior to the release of the proposed rule; therefore it does not include estimates of the costs of meeting requirements specific to the Medicare Shared Savings Program and these estimates should be thought of as “early indicators,” not as “definitive measures,” the report stated.
Looking toward the future, AHA stated that CMS should adjust the shared savings rate “in recognition of these costs in order to encourage and enable participation in this important program.”
“This analysis indicates that the organization investment required to put in place and sustain the elements necessary for success is considerably higher—$11.6 million to $26.1 million—than the $1.8 million estimated by CMS in its proposed rule for startup and one year of operating expenses,” the AHA stated. The association made its comments in a May 13 letter to Donald Berwick, MD, administrator of CMS.
The study, prepared by McManus Consulting of Greenwood Village, Colo., identified 23 capabilities that must be developed across four categories to achieve the desired transformation in care delivery:
- Network development and management;
- Care coordination, quality improvement and utilization management;
- Clinical information systems; and
- Data analytics.
The information gathered from four case studies was used to create two hypothetical examples to estimate the startup and ongoing costs of establishing an ACO. The first represented a single free-standing hospital, 80 primary care physicians and 250 specialists; the second example included a five-hospital (1,200-bed) system, 250 primary care physicians and 500 specialists.
The study was based on a series of case studies of organizations that have already taken steps to manage the care of a defined population in a manner similar to that of an ACO. However, this work was completed prior to the release of the proposed rule; therefore it does not include estimates of the costs of meeting requirements specific to the Medicare Shared Savings Program and these estimates should be thought of as “early indicators,” not as “definitive measures,” the report stated.
Looking toward the future, AHA stated that CMS should adjust the shared savings rate “in recognition of these costs in order to encourage and enable participation in this important program.”