Lisa Remington’s Series on Accountable Care Organizations: Part I

Lisa Remington

The Remington Report‘s Lisa Remington has provided this article special to HCAF that details Accountable Care Organizations, established in the Patient Protection and Affordable Care Act of 2010. This article is part one in a series. For more information about ACOs and other trends impacting the home care industry, consider joining Remington’s Executive Academy on Health Care Reform.

Part I – Linking Post-Acute Models With Accountable Care Organizations
By Lisa Remington, Publisher, The Remington Report

March 31, 2011, CMS issued a 429-page interim final rule for accountable care organizations (ACOs). The framework of an ACO has several common structures  to achieve clinical integration: episode-based payments, value-based purchasing, the medical home, and avoidable readmissions. In essence, the framework of the ACO becomes a key integrator for collaboration of post-acute services across care settings.

Sharing Savings

Under the proposed rules for ACOs, Medicare would continue to pay individual health care providers and suppliers for specific items and services as it currently does under the original Medicare payment systems.  CMS would also develop a benchmark for each ACO against which ACO performance is measured to assess whether it qualifies to receive shared savings, or to be held accountable for losses.  CMS is also proposing to establish a minimum sharing rate that would account for normal variations in health care spending, so that the ACO would be entitled to shared savings only when savings exceeded the minimum sharing rate.  The amount of shared savings depends on whether on an ACO meets or exceeds quality performance standards. The proposed rule would provide for additional shared savings for ACOs that include beneficiaries who receive services from a Federally Qualified Health Center or Rural Health Clinic during the performance year.

Measuring Quality Improvement

The proposed rule links the amount of shared savings an ACO may receive to its performance on quality standards.  The rule proposes quality measures in five key areas that affect patient care:

  • Patient/caregiver experience of care (7 measures)
  • Care coordination (16 measures)
  • Patient safety (2 measures, one being a composite of 17 sub-measures)
  • Preventive health (9 measures)
  • At-risk population/frail elderly health (13 measures with two all-or-none composites)

The proposed rule sets out proposed performance standards for these measures and a proposed scoring methodology, including proposals to prevent providers in ACOs from being penalized for treating patients with more complex conditions.

In previous editions of The Remington Report magazine and on our website ( under healthcare reform, is a detailed health reform timeline specific to post-acute services.

Today, post-acute services even without the formation of ACOs are able to collaborate across care settings in several key areas. For example:

  1. Quality measures
  2. Avoidable hospital readmissions
  3. Length of stay
  4. Integrated chronic care models
  5. Hospital-acquired conditions (never events)
  6. Care transition models

The time line below links health care reform specific to key changes across care settings. Keep in mind – many health systems are in advanced stages of rolling out ACOs. In all of these areas, post-acute services has the opportunity to be positioned as a solution “hub” for ACOs, medical homes and managed care organizations.

Healthcare Reform TimeLine Impact Across Care Settings To Influence Change

A. Accountable Care Organizations (ACOs) (Section 3022)

Start Date: 1-1-12

Providers Affected Across Care Settings: Hospitals, physicians, nurses

Description of Activity: Providers align to coordinate care and receive a percentage of the resulting savings as a bonus. Providers must meet 65 quality measures on five domains. Bonus payments proposed at 2 percent of savings for two-sided model; varied payments proposed at 2 percent of savings for two-sided model; varied somewhat by population size in one-sided.

Health Reform Status: Proposed rule defining ACOs released 3/31/2011

B. Episode-based Payments (Section 3023)

Start Date: 1/1/2013

Providers Affected Across Care Settings: Hospitals, physicians, post –acute

Description of Activity: National, voluntary pilot program designed to improve care and reduce costs by bundling payments to hospitals, physicians, and post-acute care providers per episode of care.

Health Reform Status: Awaiting guidance

C. Medical Home (Section 3502)

Providers Affected Across Care Settings: Physicians, nurses, direct care workers

Description of Activity: Enables community health teams to promote medical homes for community-based, coordinated care.

Health Reform Status: Awaiting guidance

D. Value-Based Purchasing (Section 3001)

Start Date: Under proposed rule, first performance period begins 7/1/2011; incentive payments begin 10/1/ 2012

Providers Affected Across Care Settings: Hospitals

Description of Activity: Portion of hospital payment tied to a weighted score of 17 clinical quality measures and eight patient experience quality measures, not to include measures of hospital readmissions.

Health Reform Status: Proposed rule released 1/7/2011

E. PQRI (Physician Quality Reporting Initiative) & Quality Reporting (Section 3002)

Start Date: Audits begin 11/20/2011

Providers Affected Across Care Settings: Physicians

Description Of Activity: Extends Medicare bonus payments to physicians who successfully report quality measures through 2014 with payment reductions for not reporting; additional bonus to physicians who successfully report through the new Maintenance of Certification program.

Health Reform Status: Effective now. Implemented in physician payment rule published 11/29/2010

F. Avoidable Readmissions (Section: 3025)

Start Date: 10/1/2012

Providers Affected Across Care Settings: Hospitals

Description of Activity: Reduces payments to Medicare acute inpatient hospitals for potentially avoidable readmissions; requires public disclosure of hospital-specific readmission rates.

Health Reform Status: CMS may release regulations and guidance later this year.

If you are interested in accelerating your agency’s alignment with health care reform, please see the brochure on Remington’s Executive Academy On Health Care Reform.

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