Medicare Program, Competition Driving Commercial ACO Development

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imageThe Medicare Shared Savings Program and competition from other organizations, not pressure from employers, comprise key catalysts for the development of commercial accountable care organizations (ACOs).

That’s the perspective of senior payor and provider executives from two dozen payer and provider entities nationwide who participated in a study commissioned by MedeAnalytics late last year. The objectives of the research, which was conducted in December 2010, were to assess perceptions, drivers, challenges and developing needs related to creating or participating in a commercial ACO.

The Medicare Shared Savings Program is the Medicare ACO provision within the Affordable Care Act. Commercial ACOs are distinct from Medicare ACOs in that a commercial payor, rather than Medicare, provides the financial incentives to providers for quality and cost performance.

 Payors queried for the study cite financial implications (risks, model for shared savings) and reaching an agreement on quality and cost/efficiency measures as the top two challenges facing those wishing to start an ACO. Both groups agree that electronic medical records, with the capability to share data between providers and a strong base of primary care physicians, are the essential components or competencies for a successful ACO.

Payors and providers participating in the research also concur that key performance indicators for cost/efficiency—namely admissions, length of stay, and use—rank as the top ACO performance indicators. Additionally, representatives of both sides deem electronic medical records (EMRs) a necessary component of ACO success and recognize the need for improved reporting and clinical data exchange capabilities to make an ACO model work.

However, the study also identified a few areas in which the opinions of the two factions differ. Notably, when asked who should develop quality measures for the ACO, a majority of payors claim to favor a collaborative approach involving not only themselves, but hospitals and physicians. By contrast, one-third of providers queried believe hospitals alone should develop quality key performance indicators—and the same number advocate a collaborative approach.

In addition, payors consider the National Center for Quality Assurance’s Healthcare Effectiveness Data and Information Set (HEDIS) a preferred umbrella performance measurement set; many already utilize it. Meanwhile, providers point to specified CMS core measures, hospital-acquired infections, readmissions, mortality, and patient satisfaction the best key performance indicators for quality.