By Maria Castellucci  | May 26, 2017

Establishing an ACO requires healthcare organizations to build data analytics tools, enhance information technology and hire care coordinators and additional staff to oversee the venture. These costs vary depending on the size of the ACO, but can range in the millions. 

After establishing an ACO, healthcare organizations spend $1.6 million per year on average to maintain the ACO, according to a recent survey from the National Association of ACOs. 

Recognizing that ACOs have already made significant financial investments to establish a sustainable value-based payment model, the CMS established a MACRA track that won't harm them financially. Under the MIPS-APM track, physicians and their ACOs aren't liable for any actuarial downside risk. 

This is beneficial for ACOs since most aren't yet prepared to move onto riskier models. 

Of the 480 participants in the Medicare Shared Savings Program, about 90% remain in Track 1. This popular avenue requires no downside risk for organizations, while the others do. 

It's difficult for ACOs to jump from Track 1 to the other ACO models because there "is a big transition gap," said Allison Brennan, vice president of policy at the National Association of ACOs. The other tracks require a significant amount of risk compared to Track 1. 

The new CMS model, Track 1+, will likely be a good "stepping stone" for Track 1 ACOs to advance in the program, she said. Track 1+, which is set to begin in 2018, is a two-sided model with less downside risk than the other established tracks. 

ACOs will also likely gain more traction under MACRA because they "are very well-positioned," Brennan said. 

This alignment with MACRA is seen with the much more lenient reporting the CMS established for Track 1 Medicare ACOs. 

Under the MIPS-APM track, physicians are scored under the same four performance categories as MIPS, except cost, known as resource use by the CMS. ACOs don't have to factor in costs because the CMS is already evaluating this metric as part of their participation in the Medicare Shared Savings Program. 

In addition, ACOs are given a pass on some of the other performance categories required in MIPS. The ACO receives full credit for improvement activities, which accounts for 20% of the total composite score under the MIPS-APM track. This is because an ACO is already making efforts in value-based payment models such as population health and care coordination. 

The quality measures, which account for 50% of the total composite score, are changed to reflect the 15 measures currently evaluated as part of involvement in a Track 1 ACO. 

The fourth category — advancing care information — is weighted to reflect the average score of all physicians who are part of the ACO and it makes up 30% of the total composite score under MIPS-APM.

How Medicare ACOs are scored on the third MACRA track

Percentage of composite score

hover to see score details

Advancing care information
Improvement activities
Resource use
Source: Premier

The MIPS-APM track is appealing for doctors because their ACO will handle the majority of the reporting requirements, said Joe Damore, vice president of population health management at Premier, a healthcare performance improvement company based in Charlotte, N.C. 

"When we explain this option to organizations, a lot are deciding" to establish an ACO, Damore said. 

Lured by the benefits of the MACRA track, Columbus (Ga.) Regional Health is now creating a Medicare ACO, which will include 150 physicians. 

Jim Zacharias, executive director of the hospitals' physician network, said its providers aren't quite prepared to take on downside risk. The hospital has only just begun to venture into value-based payment efforts. 

"We can't lose money doing this," Zacharias said. "It's a way for us to dip our toe in the water and get physicians thinking about collaborating together and looking at metrics in their communities." 

Organizations have until May 31 to send the CMS a letter of intent to apply for a Medicare ACO.

Medicare Accountable Care Organization initiatives to improve how the health system cares for patients

Today, the Centers for Medicare & Medicaid Services (CMS) announced 121 new participants in Medicare Accountable Care Organization (ACO) initiatives designed to improve the care patients receive in the health care system and lower costs. With this announcement, ACOs now represent 49 states and the District of Columbia.

“Americans will get better care and we will spend our health care dollars more wisely because these hospitals and providers have made a commitment to change how they do business and work with patients,” HHS Secretary Sylvia M. Burwell said. “We are moving Medicare and the entire health care system toward paying providers based on the quality, rather than the quantity of care they give patients. The three new ACO initiatives being launched today mark an important step forward in this effort.”

ACOs were created to change the incentives for how medical care is paid for in the U.S., moving away from a system that rewards the quantity of services to one that rewards the quality of health outcomes.

The last thing anyone wants are needless trips to the doctor, more lab tests and prescriptions, or — on the other end of the spectrum — to end up repeatedly in the emergency room after ignoring health problems.

These scenarios are symptoms of what’s wrong with health care in America today. They also drive up costs.

Many people just aren’t good at keeping up routine checkups and making healthy lifestyle choices; some don’t want to; and others simply don’t have the money to make their health a priority until they face a medical crisis. As a result, doctors and hospitals end up practicing sick care rather than health care.

However, there’s a movement afoot to change these dynamics across the nation, and it’s taking hold in the Fredericksburg area. A growing number of local general practice doctors and specialists are joining the Mary Washington Health Alliance so they can improve care while cutting costs for needless lab tests, prescriptions and treatments.


Mary Washington Healthcare and area doctors have joined together in a new program to improve healthcare and lower costs.

The Mary Washington Health Alliance, as it’s called, is helping MWHC and about 400 independent doctors coordinate patient care, share best practices and provide follow-up for high-risk patients.

“Its goal is to respond to changes in the health care industry,” said Travis Turner, the alliance’s vice president of clinical integration. “How better to do that than partner the health care system and local physicians?”

Begun on a limited basis last year, the alliance is already having an impact. The total cost of care for the 50,000 people that it serves—employees in its self-insured plan and Medicare patients—has decreased 3 to 4 percent so far this year compared with 2014, when it was first implemented, Turner said.

Meanwhile, total health care spending nationwide has increased 4.4 percent this year, according to the Peterson–Kaiser Health System Tracker.

Mary Washington Health Alliance is what’s known as an Accountable Care Organization, a concept that’s springing up nationwide. So far, it is the only one in the Fredericksburg area.

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