Healthcare Groups Suggest Ways to Revamp Incentives for ACOs

Large health systems and other healthcare groups including the American Medical Association and the American Hospital Association (AHA) have approached the current Administration with suggestions about how to rework the Medicare Shared Savings Program’s accountable care organizations (ACOs).


These groups contend that the timeframe for taking on risk is too short and the bonuses too difficult and/or too small to be worth the investments and risk.


As reported here, CMS proposed changes to the ACO program in December and recently announced that 50 percent of Medicare spending that isn’t for managed care would be through ACOs and other new payment models by the end of 2018.


The proposed changes were welcomed, but industry spokespersons noted the changes did not go far enough. AHA and other organizations said the bonuses are too difficult to achieve, and encouraging ACOs to accept risk for potential penalties in order to earn greater bonuses will hurt those hospitals and medical groups least prepared to make the shift.


Some of the suggestions from AHA, AMA and 16 other healthcare organizations include:


  • No bonus reduction for ACOs that defer penalties (as provided in the CMS proposal)


  • Revision of bonuses based on quality: ACOs with high quality scores should be rewarded with additional payments. Currently, if an ACO has weaker performance against quality benchmarks, it gets to keep a smaller share of the savings it earns. However, strong quality performance doesn’t boost the financial return and there is not a pure penalty for poor quality.


  • More flexibility for ACOs to choose between two types of thresholds that savings must reach before ACOs can earn bonuses


  • Changes in how CMS identifies which patients are assigned to an ACO: patients should be identified at the start of the year without revisions that retrospectively change the patients against whose care the network’s performance is measured


  • A new option: more sophisticated ACOs could earn bigger bonuses it they accept the potential for larger penalties (the group added that CMS should consider allowing these ACOs to operate under global budgets)


(Source: “Eased ACO rules aren’t enough to lure more takers, healthcare groups say,”Modern Healthcare, February 8, 2015)





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