Accountable Care Organizations and Patient-Centered Medical Homes

Most providers understand that payers are migrating from a fee-for-service model to pay for quality. For instance, on July 9, 2015 CMS proposed that hospitals receive bundled payments for knee and hip replacement surgery. Hospitals will be held accountable for the quality of care provided by the hospital from admission to 90 days after discharge and will either receive a bonus or be penalized in payment.

Such rewards and punishments are also being faced by physicians. On April 16, 2015 President Obama signed the Medicare Access and CHIP Reauthorization Act (MACRA). This bill repealed the Sustainable Growth Rate Formula (SGR). For all physicians there will be a 0.5% increase in reimbursement for the next four years. After that, there will be no increases for six years. The increases over the ten years will surely not be enough to exceed inflation for the same period. To overcome this real cut to reimbursement, MACRA establishes a two-tier payment track for physicians. One track rewards providers with greater reimbursement for providing better care: Advance Payment Model. This program will be detailed by CMS by May 1, 2016. More than likely, rewards will be given to physicians and physician groups that are part of patient-centered medical homes (PCMH) or accountable care organizations (ACO). Physicians willing to receive bundled payments will also probably be rewarded. According to MACRA the reward is up to 9%; however, poorly performing physicians or physician groups can also be penalized up to 9%.

The other track for physicians involves quality reporting: Merit-Based Payment Systems (MIPS). MIPS will be based upon four measures-quality, efficiency, meaningful use of EHR’s and clinical practice improvement activities. The makeup of MIPS will be determined by May 1, 2016 also.

CMS is not the only payer rewarding physicians for providing quality services. Many private payers also provide incentives. I find that many payers are rewarding physicians for becoming certified as PCMH’s. The Medical Group Management Association has recently provided some statistics for comparing reimbursement for PCMH’s to groups that are not; the increases are from a variety of payers, but not CMS at this time. The data shows that although the total general operating costs of a medical home are greater than non-medical home practices–$126.54 versus $83.98 per patient-the total medical revenue after operating costs are much higher–$143.97 for the medical home versus $78.43 for the non-medical home per patient. Blue Cross Blue Shield of Michigan has a program-PGIP-that rewards physicians for PCMH certification. Physicians can be rewarded handsomely for their E/M coding (evaluation and management services). Dr. Greg Stefanek’s group receives 25% for every one of its Michigan BC/BS patients, according to an online posting of Medical Economics “ACO or PCMH: Making a crucial decision for your practice”.

The rewards for becoming certified as a PCMH or contracting as an ACO can be quite significant. Let us look a little deeper into what each is.

A patient-centered medical home is a designation by an authorizing body for having achieved key goals that it sets for physicians. For instance, the National Committee for Quality Assurance (NCQA) has as one of its goals that physicians focus on population level health measures in its practice. There are many different accrediting bodies, but there are three others besides NCQA that are recognized nationally-the Accreditation Association for Ambulatory Health Care, the Joint Commission and URAC. Each focuses on key concepts for accreditation, according to Medical Economics:

· Treats patients holistically

· Provides patients with extended access to providers

· Provides team-based care

· Effectively coordinates care with other providers

· Focuses on quality and safety

· Engages patients in their own care

The relationship between payer and PCMH does not change other than the enhanced reimbursements for the designation.

An accountable care organization is a group of providers that can include physician groups, specialists, ambulatory care sites, hospitals and long term care facilities. The ACO contracts with a payer to provide services for a population of patients designated by the payer for a given price per patient. The services must achieve a quality specified by the payer. If the ACO can provide the services at the designated quality and at a cost less than contracted for, it is rewarded by getting to retain a contracted percentage of the savings.

The ACO forms a governing structure for its members that directs how savings are to be shared. The governing body also works to keep patients in the ACO network, to have patients seek all of their care from the ACO members or with groups that coordinate with the ACO. The ACO benefits when its members coordinate closely in providing evidenced based care to its assigned patients.

Like PCMH’s, ACO’s are very patient-centered. They develop a culture that focuses on the needs of the patient. They work to achieve collectively many of the goals listed above for PCMH’s. Further they must have a management structure that supports continuous quality improvement in patient care that adheres to the measures established by the payer. ACO’s often work to provide compatible health information technology across its network in order to better coordinate care.

Because there is a governing body of an ACO that sets standards of achievements for all its members, there is often significant support from experts in helping members achieve their goals. However, if a period of time a member of the ACO cannot achieve the set goals, it can be removed from the ACO.

Given the relentless change in the methods of reimbursing medical providers I recommend that they look carefully into becoming designated as a PCMH or become a member of an ACO. Providers who are flexible and who are willing to work hard to achieve the goals of an ACO or PCMH will find doing so financially rewarding most of the time. I also recommend that primary care physicians who are part of an ACO also become designated as a PCMH as the rewards for doing so can help the ACO achieve its goals and also the PCP can be rewarded by their payers who are not a part of the ACO contract.

If you would like more information about comparing ACO’s and PCMH’s, I have found the article from Medical Economics very helpful. Go to here to go to the article.