ACOs were set up under the Medicare Shared Savings Program as part of the Affordable Care Act. Providers do not have to form ACOs, but those who do have the opportunity to keep part of the money saved if they meet certain quality and economic goals. ACOs take responsibility for the care of a minimum of 5,000 Medicare patients for three years and, unlike health maintenance organizations, are sponsored by physician groups or hospitals working in coordination with each rather, rather than insurers. However, Medicare beneficiaries who are part of an ACO remain free to seek care from any provider anywhere.
The current system pays on a fee-for-service (FFS) basis and would continue to pay the doctors and the hospitals running the ACO as it now does now, but it would measure the total costs for each patient cared for and compare that with patients who are not covered by an ACO. There would be a benchmark for the ACO, and its performance would determine whether it shared in savings (because it costs Medicare less than the cost of patients in the regular system) or must share in losses (because it costs Medicare more than for regular patients). There will be two risk models: one in which savings only are shared in the first two years, and then savings and losses are shared in the third year. In the other model, the ACO will share both savings and losses with the government in all three years. It is expected that 860,000 of the 46 million Medicare beneficiaries will be involved in ACOs starting in April 2012.
There are many different groups interested in the ACO approach; for example, teaching hospitals in the Baylor Health Care System in Texas and the Robert Wood Johnson Medical School in New Jersey, are participating. According to Deloitte, “The pilot program at the Robert Wood Johnson Medical School in New Jersey will include 100-150 physicians, various specialties and will be linked to half a dozen hospitals. RWJF’s [Robert Wood Johnson Foundation] bonus and payment structure is still to be determined. Baylor is planning to incorporate 4,500 physicians and 13 of its hospitals into an ACO and implement a bundled payment system to control costs. As part of Baylor’s plan to increase participation, it is directly marketing the ACO idea to employers and offering them lower costs in exchange for, possibly, limited health insurance plan choices”
In Colorado, the state created the Accountable Care Collaborative, which will enroll 60,000 Medicaid patients. There are also private-sector payers adopting the ACO model.
The federal Department of Health and Human Services (HHS) has also created a category of 32 Pioneer ACOs, health systems in 18 states that will offer the coordinated package of care.
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