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ACOs, or accountable care organizations, seem increasingly like the gold standard for CMS, incentivizing health systems to provide cost-efficient, quality care for an estimated 11+ million patients in 2022. And by 2030, the Biden administration wants all Medicare beneficiaries—numbering close to 64 million in 2021—to have access to “accountable care.”
ACOs are made up of doctors, hospitals, and other healthcare providers who financially benefit when their patients, often those with chronic illness, receive quality care that also controls costs by keeping patients healthier. It’s a win-win for the federal government (and private insurers who support programs similar to Medicare’s) and healthcare professionals, ensuring that “patients get the right care at the right time, while avoiding unnecessary duplication of services and preventing medical errors,” as the US Centers for Medicare and Medicaid Services (CMS) explains it.
“In the default system, [the doctor] gets paid simply based on how often they see you,” said Sean Cavanaugh, chief policy officer at Aledade, a company that helps providers band together to create ACOs. “Under an ACO, he or she gets paid based on [whether] you stay well.”
Successful ACOs that Aledade works with pay the company a cut of the shared savings they get back, said Cavanaugh, a former deputy administrator and director of CMS. Nearly all ACOs participating in Medicare’s Shared Savings Program—99%—met the quality standard required to share in those savings, according to CMS. (Those Aledade worked with that earned shared savings got back an average of $248 per patient enrolled in Medicare per year, Cavanaugh said.)
Still, economics can be an incentive or a disincentive to become an ACO.
Primary care doctors are leading the way in joining ACOs, with well over half—about 57%—participating in one. But limited resources and a small practice’s size can be an obstacle because CMS regulations require ACOs to have at least 5,000 Medicare patients annually to qualify for the Shared Savings Program. And health systems, which provide many procedures, tests and other services at high volume, may still favor a traditional fee-for-service approach.
But that’s not always the case.
Being an ACO certainly makes sense for the New York-based Montefiore Health System, where about 85% of its patients are enrolled in governmental programs like Medicare, said its SVP of population health management, Stephen Rosenthal.
“Montefiore felt the need to take more financial risk in trying to improve quality,” he said—like better managing chronic disease, which can drive up cost. “If we can improve the patient’s experience…improve their quality of care and their health status,” he added, “that’s our primary goal in the ACO.”