What’s in store for health organizations looking to implement Accountable Care Organizations (ACOs) after the Centers for Medicare and Medicaid Services (CMS) released their new ACO rules? A much easier way to adopt an ACO model with enhanced opportunities and reduced risks.
While these changes make forming an ACO easier, they are still a far cry from how most hospitals and health systems operate in their traditional pay-per-service system. Being held “accountable” for their patients’ health and well being is a powerful and intimidating concept, but one that if executed correctly can have tremendous benefits.
New ACO Highlights
- Start-up and Ongoing Costs: CMS estimates that the total cost starting-up an ACO will be in the $29 million to $157 million range. Meanwhile, annual operating costs are estimated to be in the $63 million to $342 million range.
- Enhanced Shared Savings Program:While start-up and ongoing costs are great, the opportunity to relish in shared savings can be greater. For the fiscal year 2012, participating ACOs in the lowest percentile, that is ACOs meeting the least amount of quality measures and other components gauging incentive payment, would receive $60 million in bonus payments while participating ACOs in the 90th percentile would receive $170 million. If total costs and total bonus payments are considered from 2012-2015 for participating ACOs in the median percentile, the result is an estimated benefit-cost ratio of 2.9.
- Reduction in Quality Measures: Instead of 65 quality measures needed to meet to qualify for incentive payments, ACOs now need to meet 33, making potential organizations less hesitant in participating.
- EHRs Not Required: As an efficient and high quality form of communicating patients’ information between healthcare providers, electronic health records (EHRs) are of value in ACOs. However, for numerous reasons from an existing EHR initiative called the EHR Incentive Program to promoting ACO participation, CMS decided to cut them as a requirement.
Previously my thoughts on ACOs were mixed. While some health systems saw improvements such as Montefiore Medical Center in New York and Geisinger Health System in Pennsylvania, especially in readmissions, others felt the start-up costs were far too high and risks too great. I feel these new rules are a big step in the right direction for more health care entities looking to adopt the ACO model.
As a medical real estate developer, I view the redirection of healthcare delivery services as a huge opportunity. By nature, successful real estate developers always drive to be ahead of the curve. The process of medical real estate development is much like driving a race car, anticipating the change in direction before it’s too late. As entrepreneurs we look forward to investing in industry growth.
You may view the new ACO set of rules in it entirety here.
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