Webinar: Theres more than one road to ACO shared savings

Accountable care organizations (ACOs) offer an opportunity for providers to participate in Medicare in a new way—rewarding better care for patients, said John Pilotte, director of performance-based payment policy staff at the Centers for Medicare & Medicaid Services (CMS), who made his comments during a June 2 webinar. 

Fellow presenter Dana Safran, senior vice president of performance measurement and improvement at Blue Cross Blue Shield of Massachusetts, gave an overview of that organization's Alternative Quality Contract payment model.

“Working together and more efficiently, organizations can come together to better coordinate both Part A and Part B services and keep a portion of the savings they generate,” Pilotte said.

All Medicare providers are eligible to be part of an ACO, and four specific organizational structures are eligible to participate independently: physician groups, physician networks, hospitals employing physicians and other professionals, and joint ventures or partnerships. All providers and suppliers can join an ACO, but must do so in one of these organizational structures, according to Pilotte.

In addition, participants must have the resources to invest in the infrastructure necessary to better coordinate care. The criteria are designed to encourage providers to have a vested interest, either financially or through time and other resource commitments, he said.

The proposed rules offer a two-track approach for shared savings:

1. An initial three-year agreement in which the ACO shares savings but also shares losses—“the idea being that they could share in [a] greater upside if they generated enough savings.” Organizations could keep up to 65 percent of shared savings in this arrangement, he explained.
2. A three year-agreement that would include two years of a “one-sided” (shared savings only) plan, then a “two-sided” (shared savings/losses) approach in the final year. However, in return for Medicare retaining the insurance risk for patients, ACOs would only be able to share up to 52.5 percent of the savings they generate, he said.

All ACOs who elect to continue in the program after the first agreement period must continue in the two-sided model.

In addition, the CMS Pioneer ACO initiative would take organizations that already have more advanced risk arrangements with payors and move them on a more aggressive timeline toward capitation with Medicare, and more aggressive shared savings and losses as well, Pilotte concluded.

The AQC approach
Payors have taken steps of their own to control healthcare’s exploding costs—such as Blue Cross Blue Shield of Massachusetts’ Alternative Quality Contract (AQC), said Safran.

When the state passed a law requiring that individuals carry insurance, “we became aware that healthcare is so expensive and that healthcare costs increase at such an accelerated rate compared to everything else in our economy,” Safran said.

Blue Cross challenged itself to come up with a new way to contract with provider organizations to curb those costs while supporting quality improvement and outcomes. The result was the AQC model, which includes the following components:

1.  A contract for the full continuum of care, “from prenatal to end of life and everything in between,” Safran said;
2. Provider organizations assume accountability for both cost and quality of care in the contract—and it’s a five-year deal. “We didn’t want provider organizations or us to be distracted by the next contract negotiation,” Safran said.
3. A global budget that’s specific to each provider organization. There is also an incentive to identify where there’s waste—across settings or types of care—and try to extract that from the system and share in those savings.

The AQC is not based on “tournament style” improvement, in which there have to be losers in order to have winners, she added. “Instead, we set definitions of what is good performance on each measure, and performance we consider to be great. That doesn’t change over the five-year period, which allows organizations to plan in a very deliberate way how they’ll move forward.”

Performance improvement is incentivized early on and in the middle of contracts to reward high-quality performance throughout the five-year agreements. And there have been improvements, according to Safran.

The first AQCs were signed in 2009. Currently, 470 million members are attached to an AQC provider, up from 305,000 in 2009, and AQCs now include more than one-third of the physicians in the state’s Blue Cross Blue Shield network. In addition, Blue Cross Blue Shield of Massachusetts is on track to reach our its goal of reducing annual cost growth trends by 50 percent over five years, she added.

“Providers willingly accepted [the AQC model], with no detriment in the patient experience,” Safran said. “The way practices were integrating, patients felt like they were getting concierge care.”

The webinar, titled “The Big Picture: Introduction to Accountable Care Organizations,” was sponsored by the National eHealth Consortium.