What Is an Accountable Care Organization (ACO) and How Does It Work?
Posted by Janna Vienca Cañezal
The healthcare system is undergoing a significant transformation in payment systems and care models. Policymakers and healthcare leaders are shifting towards value-based care, and Accountable Care Organizations (ACOs) continue to be a successful example of such models. In 2019, ACOs under the Medicare Shared Savings Program generated $1.19 billion in total net savings and achieved a 92% overall quality score. Although there are no financial reports on how ACOs financially fared during the pandemic yet, they have been instrumental in providing continuous care amid the crisis.
What Is an Accountable Care Organization?
An Accountable Care Organization (ACO) is a group of providers, clinicians, hospitals, and other medical professionals who work together to provide high-quality care and share the medical and financial responsibilities for a defined population of patients. The goal of an ACO is to provide coordinated care, improve patient outcomes, avoid duplication of services, and prevent medical errors, all while reducing healthcare costs.
As a patient’s first contact into the healthcare system, primary care providers serve as an essential foundation of an ACO. ACOs can also include specialists, hospitals, nursing homes, pharmacists, and other healthcare facilities and services.
How Does an ACO Work?
ACOs originally started as a Medicare program in 2012, but private payers soon began to see its benefits in clinical efficiency and providing quality care. Although private payers tend to have more flexibility in their contracts with ACOs, they work the same way as CMS.
In an ACO, all providers are responsible for a patient, even if they go out-of-network for a certain service. To ensure quality care, it is important to keep patients within the ACO. It is also easier to manage cross-organization communication and stay on top of the patient’s health since both organizations have the same goals. ACOs use EHRs for documenting and sharing information, data collection, and measuring quality performance.
In the ACO model, providers are rewarded for balancing spending and quality. An ACO’s quality of care is measured across four categories:
- Patient/caregiver experience
- Care coordination/patient safety
- Preventive health
- At-risk populations
These quality performance measures also determine whether an ACO qualifies for a shared savings payment, or a financial bonus, under predetermined financial risk arrangements.
Payers set a financial benchmark on healthcare costs, and if providers perform services at costs below the benchmark, they get a share of the savings. When an ACO goes into a contract with a payer, they can choose between two risk models. In an upside risk model, if ACOs exceed the benchmark, they don’t qualify for the shared savings payment and don’t get penalized. However, in downside risk models, if ACOs go beyond the financial benchmark, they will be asked to pay back part of the excess spending they incurred. Upside risk models are undoubtedly a safe option, but downside risk arrangements offer higher shared savings rates.
Why Should I Join an ACO?
Joining an ACO isn’t just about providing quality care. It can sometimes be a smart business strategy for your practice with the added benefit of gaining government incentives.
Partnering with other healthcare providers within an ACO improves the patient experience by closely collaborating with all the providers involved in their care. Providers within an ACO communicate more efficiently and make better-informed decisions because their quality of care determines the savings they will receive. Additionally, if a patient is satisfied with their delivery of care, they are more likely to refer your practice to their peers.
In 2018, The American Medical Association (AMA) reported that 54% of providers participate in an ACO. Recent data from Milliman Torch Insight reveals that there are over 1000 ACOs, and these ACOs cover over 36 million patients. These data indicate the rising popularity of joining an ACO and its increasing patient base. If practices in your area join an ACO and you don’t, you could be left out on that referral network, thereby losing patients and revenue. Joining an ACO gives you a continuous stream of patients since providers will most likely refer another provider within the same ACO. As a business, that is a huge factor in determining success.
ACOs often offer additional support and resources for your practice to meet quality measures, including HCC coding, MIPS, and improving your HEDIS score. They also provide IT and revenue enhancement opportunities to coordinate care better and manage healthcare resources wisely.
It is important to note that not all ACOs are created equal. It pays to read and understand the contract’s fine print before joining and see if that ACO aligns with your practice’s goals.
Can I Join Multiple ACOs?
Primary care providers can only join one ACO, while specialists can join multiple ACOs. Additionally, ACOs can work with multiple payers simultaneously, including one Medicare and one or more private payers.
How Do I Succeed in an ACO?
EHRs serve as a vital tool for ACOs as they bridge multiple organizations together and keep track of patients as they move through different facilities. The Health Information Exchange (HIE) capabilities of EHRs allow providers to seamlessly share information, an essential step towards better care coordination. More than that, EHRs contain a wealth of clinical data such as risk scores and population health trends.
IMS, Meditab’s flagship EHR, for example, has a risk stratification feature that helps you identify and predict which patients are at high risk so that you can prioritize the management of their care. Templates are highly customizable so that you can capture the right information for reporting quality measures. You can set up alerts in the system to notify you which patients are due for annual wellness exams and screenings. Integrated patient engagement tools are also available for you to meet specific measures. Moreover, Meditab has a dedicated team that can help you with HCC coding to identify risk and enhance shared savings.
Having the right clinical and technological infrastructure is key to achieving ACO success.