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Pros and cons of ACOs

The health care system is undergoing constant change and there are always new technologies being introduced to increase efficiency for physicians and to improve medical care for patients.

This innovation and creativity is a good thing. New software and hardware as well as diagnostic, screening and billing technologies promote healthy competition and make the medical field better. These technologies also increase efficiency and cost control while providing value for both patients and health care practices. After all, no industry ever improved by remaining stagnant.

Thanks to America’s transition away from traditional fee-for-service (FFS) models, an increasing number of clinics and hospitals are implementing an accountable care organization or ACO model. The purpose of an accountable care organization is to provide value to patients. Instead of doctors trying to see as many patients as possible, it encourages high-quality care and ultimately, better health outcomes.

These organizations are federally backed and encourage voluntary participation with more than a dozen states investigating the option deeper as a value-based payment structure. One of the reasons for looking at this as an alternative is that a lot of the contracts that accountable care organizations have are with commercial populations and in the commercial market, large payers already have their own version of accountable care with benchmarks and reimbursement deals.

Approximately 30% of Medicare accountable care organizations are physician-led, says the Centers for Medicare and Medicaid Services (CMS). The preliminary results show an improvement in quality care with savings overall for patients, although the models are still evolving.

Any successful accountable care organization has three key needs.

The first is having acceptance among staff and clinical help with an acknowledgment that the delivery model requires significant changes; understanding that the needs of the population and the interventions to improve the outcomes needed; and the ability to track, communicate and share information across the rest of the accountable care organization through technology.

Whether a practice joins an accountable care organization or not, they should at least be knowledgeable about its existence and its place on the health care landscape. There are several pros and cons for any primary care provider when it comes to deciding if they want to participate in an accountable care organization. Let’s take a closer look at some of the benefits.

Bonus payments can be significant. The Center for Medicare and Medicaid Services distributed approximately $780 million in performance payments to accountable care organizations in 2017 thanks to the Medicare Shared Savings Program (MSSP). Now, one caveat is that participation in the organization does not guarantee a bonus in and of itself. But Cigna did report that from 2008 through 2016, its accountable care program had $424 million in savings and a return on investment of 2-to-1.

ACOs bring practices closer to patient-centered care. Nearly every accountable care organization is showing continued improvement when it comes to quality of care since its implementation. And practices that meet Medicare’s accountable care organization benchmarks will likely improve care for patients not previously covered by Medicare because as they change how they deliver care, they take on additional contracts that have value toward eventual bonus payments.

ACOs support independent practice. If you enjoy the independence that your practice brings and would prefer not to be part of a broader system, the accountable care organization structure can be an incentive to remain solely sustainable. Joining an accountable care organization allows organizations to access increased benchmark data that gives practices the chance to analyze their progress on cost and quality measures.

Despite all of these positives, accountable care organizations also have some downsides, including:

ACOs mean retooling your business. When you become part of an accountable care organization, you have to make sure that your practice becomes focused on quality and cost savings because an accountable care organization is a value-based payment structure that is not based on volume of patients seen during a week or even a daily basis.

ACOs are expected eventually to take on downside risk. The Center for Medicare and Medicaid Services designs a six-year Medicare Shared Savings Program ramp-up in which participants in an accountable care organization can gain the experience that comes with being part of the organization, which means you have the shared savings, but you also have to the risk of losses initially.

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