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Why Accountable Care Organizations Should Adopt Bundled Payment

One association is calling for CMS to allow accountable care organizations to participate in bundled payment models.

By Vera Gruessner

The Centers for Medicare & Medicaid Services (CMS) should consider allowing Track 1, 2, and 3 accountable care organizations (ACOs) to participate in cardiac and comprehensive joint replacement bundled payment models, according to a comment letter from the trade association AMGA.

Bundled Payment Models

Since CMS is looking to improve collaboration among accountable care organizations and hospitals participating in episode-based payment models, allowing ACOs to take part in the latest bundled payments may bring in more shared savings for the Medicare program. Additionally, this could lead accountable care organizations to take on the CMS goal of transitioning to risk-sharing arrangements.

Along with these benefits, the AMGA outlines how incorporating accountable care organizations in the newest bundled payment models would reduce the financial risk exposure that hospitals would need to manage. The AMGA explains that accountable care organizations would be “held accountable for Part A and Part B spending during the 90-day EPM” or episode-based payment model while also being able to share in cost savings with acute care hospitals and post-acute medical facilities.

Since bundled payment models depend on care coordination between hospitals, physician practices, and specialty clinics, aligning accountable care organizations with episode-based reimbursement goes hand-in-hand, explained AMGA President and Chief Executive Officer Donald W. Fisher, Ph.D., CAE, in a company press release.

“The key to succeeding in episode-based payments is care integration and coordination,” Fisher said in a public statement. “AMGA members are very experienced in these areas, and we therefore think Accountable Care Organizations (ACOs) should have the opportunity to take the lead in these bundled payment arrangements for their assigned beneficiaries.”

READ MORE: Are Bundled Payment Models or Capitation the Better Choice?

This past August, CMS released quality and cost saving results from the Medicare Shared Savings Program and its subsequent accountable care organizations. The data shows that more than 400 Medicare ACOs brought in above $466 million in savings for the Medicare Shared Savings Program in 2015, according to a CMS fact sheet.

Out of all participating accountable care organizations, 125 were able to qualify for shared savings. Those that were part of the Pioneer ACO Model and those with more experience showed better results than some of the newly participating accountable care organizations.

The Maine Community Accountable Care Organization is one example of the entities that generated cost savings and shared in savings with the Medicare program, according to a company press release.

“The health centers participating in our ACO are working better together and with our patients. Collectively, our centers generated close to a million dollars in shared savings,” Lee Umphrey, board chair of the Maine Community ACO, said in a public statement. “This resulted from quality improvements to patient care, which also lowered costs. Our ACO participants include Bucksport Regional Health Center, Eastport Health Care Inc, Harrington Family Health Center, HealthReach Community Health Centers, Islands Community Medical Services, Regional Medical Center At Lubec, Sacopee Valley Health Center, and St. Croix Regional Family Health Center.”

Another accountable care organization that garnered savings for the Medicare Shared Savings Program is Atrius Health, which is a Pioneer ACO Model participant. The ACO was able to save about $6.8 million in 2015 for Medicare and qualified to recoup some of the savings it generated. Atrius Health also gained a 95 percent quality score in its performance benchmarks.

READ MORE: How CMS Alternative Payment Programs Impact Healthcare

In an interview with, Emily Brower, MBA, Vice President of Population Health at Atrius Health, attributed the cost savings to the experience it has gained within the Pioneer ACO Model program.

“Atrius Health has a long history of working with what we would now call alternative payment models in which we were accountable for the whole range of services that our patients received across the healthcare continuum,” Brower told the news source. “We had been working in an accountable care model in both commercial Medicaid and Medicare in the Medicare Advantage space. We had a lot of the infrastructure and support to provide that same kind of model for traditional Medicare patients aligned to us through the Pioneer ACO.”

The Pioneer ACO Model consists of healthcare providers and physicians who have experience with coordinating care across multiple medical settings. This includes providers who have experience with new payment models and population health management imperative for operating an accountable care organization.

CMS reports that the entirety of the Pioneer ACO Model generated savings of more than $37 million in 2015. Along with the cost savings, quality performance also improved significantly across all four years that the Pioneer ACO Model has been operating. More than 460,000 Medicare beneficiaries were served by Pioneer ACOs last year, which is a rise of 24 percent from 2014.

The next step CMS may need to consider is to implement bundled payment models among the more experienced Pioneer accountable care organizations in order to garner more shared savings and ensure ACOs continue to transition toward risk-sharing reimbursement strategies.

READ MORE: State Medicaid Programs Invest in Accountable Care Organizations


Dig Deeper:

What Are the Benefits of Accountable Care Organizations?

How to Overcome the Challenges of Bundled Payment Models


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