by Holly Hayes
This week, Medscape News posted an interview regarding physicians’ questions about ACOs (Accountable Care Organizations) with Anders M. Gilberg, senior vice president of Government Affairs, Medical Group Management Association (MGMA). The 15 questions and answers can be seen here.
As the article points out, “The first voluntary ACO agreements will start on April 1 and July 1, 2012, and run for 3 years as part of the Medicare Shared Savings Program. To become an ACO participant, you may be a physician or other health professional in a group practice, a network of practices, or a partnership or joint venture with hospital. You might also participate in an ACO as an employee of a hospital.”
Mr. Gilberg addresses areas of particular concern for physicians considering joining an ACO:
6. Are there aspects of ACOs that doctors need to be wary of or cautious about?
Mr. Gilberg: Yes. For one, the fact that ACOs that provide a plurality of primary care services to a beneficiary are responsible for the cost of services regardless of whether they’re performed within the ACO network. That adds an element of uncertainty and risk to the program.
Also, the fact that patients can opt out of sharing their health data within the ACO network poses potential problems for participating physicians.
There’s a larger consideration for doctors, however. Because ACOs operate in part on a shared-savings model, they must be successful in reducing their fee-for-service costs to Medicare by certain prescribed percentages in order to benefit from the program. And even at this point, they will only receive 50 to 60 cents on the dollar, depending on their participation model.
Now, if the formula for shared savings was simply limited to Part B or physician services, this would be a terrible financial deal. Doctors could very well end up as net losers, especially if they’ve incurred high start-up costs. But remember that shared savings are also calculated on Part A costs, whether expended within the ACO or outside of it. Because these are generally bigger cost drivers for Medicare than physician services, a physician-only or group practice-focused ACO that’s able to help reduce Part A costs can actually end up sharing savings with Medicare, even if in the process it does not reduce its own Part B fee-for-service costs to Medicare.
One interesting financial scenario that physicians should consider is that ACOs may have to spend more on certain physician services in order to affect such matters as reducing expensive hospital emergency department visits and inpatient stays. To the extent that they can do this, doctor-led ACOs could very well end up benefiting both on the fee-for-service and the shared savings sides of the ledger. For ACOs that comprise both a physician group and an inpatient hospital, however, these calculations may become more difficult, because the hospital component will most likely find it necessary to make up for revenue that isn’t returned in the form of Medicare shared savings.
Holly Hayes is a mediator at Karl Bayer, Dispute Resolution Expert where she focuses on mediation of health care disputes. Holly holds a B.A. from Southern Methodist University and a Masters in Health Administration from Duke University. She can be reached at holly@karlbayer.com.
