ACO Investment Model - Federal Funds Available for Rural ACO Development

Rural providers have until May 29 to submit a non-binding notice of intent to participate in the Medicare Shared Savings Program (MSSP) and to apply for funding through the ACO Investment Model (AIM) Program

This year, the Center for Medicare and Medicaid Innovation (CCMI), part of the Centers for Medicare & Medicaid Services (CMS), is making available more than $100 million to help rural ACOs participating in the MSSP develop operational infrastructure.  These ACOs are eligible for $1.4 to $2.5 million in advance payments, depending on the number of Medicare beneficiaries attributed to the ACO.  This money may be used, for example, to acquire needed technology and support services and hire care coordination staff.

To be accepted into the MSSP – and thus be eligible for AIM funding – a rural ACO must have at least 5,000 and no more than 10,000 attributed Medicare beneficiaries.  On their own, most rural communities cannot reach this threshold.  Two or more communities partnering together, however, can meet this requirement. 

The first step in such a partnership is forming the ACO as a new legal entity.  CMS regulations require that multiple taxpayer identification numbers (TINs) coming together to form an ACO must create a new legal entity for that purpose.  This is a relatively simple process, requiring the filing of a one- or two-page article of incorporation or organization with the Secretary of State, and securing a TIN by completing IRS’ on-line form.  This work usually can be completed in a day or two.    

Once the ACO entity is formed and has a TIN, the next step is to submit the non-binding notice of intent with CMS by no later than May 29.  Again, this is a relatively simple process:  it is an on-line form that takes only a few minutes to complete.

Next, the ACO entity will need to get to work on completing the MSSP application, which is due July 31.  This is not a simple process, as it requires detailed information on how the ACO intends to operate if accepted into the program.  Also, the ACO must secure signed participation agreements from each entity that will be part of the ACO in advance of submitting the application. (To learn more about the MSSP application process, please see PYA’s ACO Road Map.  It provides a complete summary of the regulatory requirements.)

Because Medicare beneficiaries are attributed to an ACO based on the physician who provides the “plurality” of primary care services to a beneficiary, an ACO must recruit a sufficient number of primary care physicians as participants.  This means a hospital must communicate with its medical staff regarding the opportunity presented by the MSSP and the AIM Program. 

CMMI has not yet released the AIM Program application or the timeline for submission of that application, but we expect it will be concurrent with the MSSP application process.  We do know the application will require a detailed spend plan for the funds received through the program.  The spend plan must be unique to the ACO and identify and address local needs.

Keep in mind the AIM Program funds are not free money.  CMS will withhold any shared savings earned by the ACO until the full amount has been repaid. If an ACO elects to leave the MSSP before the end of the three-year performance period, the ACO must repay any amount still owed to CMS.  However, if the ACO completes the performance period and exits the program, any remaining amount owed will be forgiven.     

The AIM Program offers a real opportunity for rural providers to collaborate with neighboring communities to develop sustainable infrastructure for new payment and delivery systems.  The competencies developed through active participation in new care payment models, such as ACOs, are key to success in population health management and value-based reimbursement.  

PYA is supporting several rural communities as they organize to pursue the MSSP and AIM Program.  Our deep knowledge of rural health issues and experience with the MSSP and CMMI application processes allow us to be effective partners in this process.  To discuss opportunities for your community, please contact Martie Ross ( or Jeff Ellis (







Seed Money: How CCM May Save ACOs

Walgreens made big news two years ago when it partnered with large physician groups in New Jersey, Texas, and Florida to form accountable care organizations (ACOs) to participate in the Medicare Shared Savings Program (MSSP).  The concept was for Walgreens’ pharmacists to be integrated into the patients’ care team to facilitate medication therapy management, as well as administer immunizations and provide health testing. 

The pharmacy giant is in the news again, this time for terminating its relationship with two of the three ACOs including the Advocare Walgreens Well Network, which was formed with New Jersey physicians, and the Scott & White Healthcare Walgreens Well Network in Texas.  Walgreens will continue to work with one ACO, the Diagnostic Clinic Walgreens Well Network in Florida.

In the first performance year, the Advocare ACO exceeded its benchmark by $6 million.  The Scott and White ACO largely held spending in line with its target, while the Florida ACO saved Medicare over $1.5 million.  All three ACOs met the MSSP quality performance standards.

According to Modern Healthcare, Walgreens spokesman Jim Cohn said the company found the MSSP “less conducive" to efforts that include medication therapy management and analysis because “providers feel restricted to only provide services where Medicare will directly reimburse.” 

In other words, the ACOs’ physicians were unwilling to participate in care management because there is no reimbursement for that work.  They viewed their time as better spent providing services that generate immediate revenue.  Despite the fact care management is proven effective in reducing total costs of care, providers prefer the bird in hand (fee-for-service reimbursement) to the two in the bush (potential revenue from shared savings).   

But what if the birds could be lured out of the bushes with seed money?  What if physicians were reimbursed for care management services?  Starting January 1, Medicare now reimburses physicians approximately $40 per month for chronic care management (CCM) services.  As detailed in PYA’s chronic care management (CCM) white paper, this payment is based on 20 minutes of non-face-to-face care management services furnished to qualifying beneficiaries by licensed clinical staff in a practice that meets specific regulatory requirements.

For an ACO, CCM reimbursement can serve as an up-front capital investment in new care processes to improve quality and enhance efficiency.  By supporting its participants in developing and deploying CCM programs within its practices, an ACO can provide immediate return on investment in the form of new revenue.  Physicians will be incentivized to do the work now that results in long-term success.

An ACO’s support for CCM programs may involve educating participants on the reimbursement rules, providing sample documents, identifying eligible beneficiaries, vetting technology solutions, or even furnishing centralized non-face-to-face care management services.  An ACO can custom-design its offering to the needs and wants of its participants.   

Many have characterized the MSSP’s first-year results as underwhelming, with most ACOs not eligible to receive shared savings.  There are several possible explanations, but Walgreens’ decision to discontinue its participation in two of its three ACOs highlights how challenging it is to change physician behaviors.  That challenge becomes more manageable, however, with the opportunity for CCM reimbursement.


Lessons Learned from Year 1 MSSP Performance: Care Management Is Crucial


On October 29, the data analytics contractor hired by CMS to evaluate Year 1 performance by accountable care organizations (ACOs) in the Medicare Shared Savings Program (MSSP) shared its findings during a participant-only webinar.  The purpose of the webinar was to provide the 220 ACOs that joined the MSSP in April and July 2012 and January 2013 with detailed explanation of the Year 1 quality and financial performance reports these ACOs recently received.   

As CMS reported publicly September 16, 58 of the 220 ACOs generated savings in excess of the 2% minimum savings rate.  Of those 58, 52 will receive a total of $315 million in shared savings.  The other six ACOs failed to report quality data, and thus were not eligible for shared savings. 

According to the data presented during the webinar, another 60 ACOs generated savings, but were not eligible for shared savings because they did not meet the minimum savings rate.  Finally, the remaining 102 ACOs did not realize savings, and 43 of those ACOs would have had to pay a penalty if they had been participating in the two-sided model (which they were not). 

While the ACOs’ Year 1 financial performance may seem underwhelming, their quality performance was impressive.  As compared to their counterparts, physicians in ACOs are scoring higher on more than 75% of the MSSP quality measures.  Also, ACOs with 2012 start dates have shown improvement on more than 90% of those measures. 

CMS maintains the MSSP is a “learning lab,” with participating ACOs identifying and implementing best practices over time.  According to CMS, judging the program solely on Year 1 financial results is short-sighted, as many of these best practices are just now taking hold.  

The webinar delved into these best practices, taking a close look at how the 58 ACOs achieved savings.  This included the following findings: 

  • On average, the 58 ACOs lowered inpatient costs by 9.5%.  The ACOs with the poorest financial performance saw a 6% increase in inpatient costs. 
  • The top-performing ACOs reduced skilled nursing facility costs by nearly 20%, while the poor performers had a 15% increase in this category. 
  • There appears to be little correlation between the size of the ACO and the savings generated.  The ACOs with the smallest number of attributed beneficiaries performed as well as those with the highest number.

The most interesting results, however, are found by analyzing the 58 ACOs’ scores on MSSP quality metrics.  These ACOs were top performers on a multitude of expenditure and utilization measures, which is indicative of strong care management programs.  While the data does not prove a causal link between care management and cost savings, it clearly demonstrates a strong correlation. 

Based on these results, those evaluating strategies for success under value-based payment models should focus on developing care management capabilities.  This is especially true given Medicare will begin paying a per-beneficiary-per-month chronic care management fee in January 2015 at a proposed rate of about $42.00 per month.  Commercial payers are likely to follow suit in the near future. 

These payments will assist providers in building the infrastructure, including staff and supportive technology, which is necessary to manage high-risk, high-cost (and rising-risk and rising-cost) patients, including staff and supportive technology.  It’s like having your cake (fee-for-service payments for chronic care management) and eating it, too (generating savings).  “So, let them eat cake!”   


A Rose by Any Other Name

As a healthcare consultant, I live in a world of TLAs – three letter acronyms. Accountable Care Organizations are ACOs, and are kind of like PHOs (Physician Hospital Organizations), which sort of remind us of clinically integrated IPAs (Independent Practice Associations). Once we have made that shift from actual words to brief alphabetical snippets, the meaning of the original words seems to get confused or even lost entirely. This may be the case with one of our latest acronyms – PCMH.

Many would say that PCMH stands for Primary Care Medical Home but recently I have seen the definition shift. PCMH now can also mean the Patient Centered Medical Home – which, when you look at most published definitions, still looks more physician centered than patient centered. Much of our society is already light years ahead of medicine when it comes to being consumer centric. As I considered this, I wondered what a truly Patient Centered Medical Home might look like. Not one that just talks about the patient, but one that is all about the patient.  

Whose network is it anyway? Primary care medical homes are all about coordination of care by a single physician, one who can make sure all of my medical needs are met with high quality and efficiency. In a Patient Centered Medical Home, the physician is part of the patient’s network, not the other way around. Why would I want only one doctor to care for all of my needs? If I have diabetes, CHF and osteoporosis, I want to choose the best endocrinologist, dietician, cardiologist, rheumatologist, nurse practitioner, and maybe even an acupuncturist if I happen to believe it might help my pain. In a patient centered model, the physician is no longer the coordinator of care; the patient has assumed the majority of that role.

Care when I want it– In a primary care medical home, access is important. Things like weekend hours, evening hours, and even telemedicine are key components. In a patient centered medical home, the physician’s schedule is not the issue at all; the patient’s schedule is the key. Access to care would simply be on demand, 24/7. Sound extreme? Think ATMs and TiVo. When is the last time you heard a 25-year-old ask when the bank was open or when a TV show was on?

No secrets - Physician led medical homes focus on transparency. Sharing information with patients and patient education is an important element of their success. However, in the world of instant access to information, including medical information, a patient centered model would move fromtransparency about information to listening to information that I, as the patient, bring regarding me and my care. Current models of care are still designed for the medical information and treatment plans to flow from the physician to the patient, not the other way around. Patients may not have the level of education that we as physicians have, but they do have access to the same information and, at times, new and different information, that we may not always consider. The information playing field may never be leveled, but in the new healthcare world it is certainly tilting more toward the patient than ever before.

Making sure we understand the meaning of the new care models we are developing is critically important as reform marches on. Words are important, and how we interpret them is even more so. MD – Medical Doctor – still has great meaning, and I believe it always will in any new care model. But to many people, MD is also beginning to mean Modern Doctor - and that definition is still in the works. 

One Size Fits Most

Mu'u Mu'u

This may be a surprise to some of you, but I do not look good in a mu’u mu’u. For those of you who may not know, a mu’u mu’u is a very comfortable, very loose fitting Hawaiian dress that just sort of hangs off the shoulders of the wearer. It is designed to fit almost anyone and to be worn for any situation. And although it may fit over my frame, I certainly do not look good in one.

As I read and follow what’s happening in the healthcare landscape, it seems to me that many people are searching for the mu’u mu’u model for healthcare. What can we design that fits (most) everyone in every situation? And by doing so we have lost sight of the fact that there are very likely multiple solutions to this very complex problem.

Last week Atul Gawande wrote an excellent article in The New Yorker entitled “The Hot Spotters” that asked the question Can we lower healthcare costs by giving the neediest patients better care? His arguments were both persuasive and thought provoking. I do believe, this model may indeed work for certain patient populations – the sickest among us, but will almost certainly not work for the remainder of us. Models such as Qliance in Seattle or Hello Health in New York City provide new and innovative ways of seeing patients and will be great for some, but will not work as well for the patients Dr. Gawande describes.

Much of the discussion and debate on Capitol Hill and around the country is focused on which model will improve quality the most and save the most cost. This equation too frequently circles back around to a model which is driven by the most efficient payer structure or by what will fit into the already existing mammoth infrastructure that exists in healthcare today. As long as we continue to ask the question of which model is best, I fear we will continue to get the same answers. The question we should be asking is how can we best care for very different patients with very different healthcare needs. Before we all get herded blindly into the ACO corral, let’s be certain we are focusing on caring for the needs of patients, not just the need to have a solution.

.....And Now for Something Completely Different

Last week the healthcare world was all abuzz. The federal government was set to begin the journey that every player in the marketplace has been waiting for, the road to the accountable care organization. Over 300 industry leaders gathered in Baltimore to hear just how this was going to occur, to hear the “new normal.”  Well… that’s not exactly what was heard. Although there were some mentions of changes to safe harbors and inclusion of all players, not a lot of new and different ideas were shared. While following those who were live tweeting the event, comments like “ an ACO a PHO without the H?” and “Without antitrust legislation, we’ll have only large hospital networks remaining..”  and even “..capitation is on the horizon” were the norm of the conversation.

The closer we get to implementation of this “new” model, the more similar it appears to ideas that have been tried (and failed) before. It seems we have not yet developed the appetite for a model that is new and truly different.

Apple’s iPad has been out for less than a year.   It is anticipated that within the year it will have its own category of electronics, and will outsell netbooks by a large margin within the next two years. The iPad was expected to do well, but not this well. The iPad, like healthcare reform, was promoted as something new and truly different. But the iPad was not only new and different, it was also better for the customer…at least at some things. It made doing things that customers truly wanted to do (get information fast) better and easier, even at the cost of not being as good at others (word processing, gaming, etc.).

In an article in Kaiser Health News this morning, the author outlines how many industry players are lining up to make ACO’s work – not for the patient, our customers, but for them, the providers of services. These industry insiders all seem to be afraid of what they might have to give up under this new model of care, and are looking to make sure they maximize their own gains. There may be a lesson for us to learn from our friends at Apple. If we truly want to improve our model of care, we are going to need to give some things up. Everything cannot stay the same with different titles. Different for the sake of different is not going to cut it either. If healthcare is truly going to be reformed, we need to come up with both “different” and “better” – for the providers AND for the patients. So the question remains, does the highly publicized and government-endorsed accountable care organization meet these standards? Based on those attending the listening sessions this past week, I’m afraid the jury is still out.

Dressing the Avatar

Default AvatarAs a father of three teenage boys, my life is rarely dull. Their insights and slant on most things are generally entertaining to say the least. Last night as I was sitting at my dinner table, my 16 year old son caught my attention.  “Dad, the folks who make video games have got it figured out. They are marketing geniuses. They must be rolling in money.” Curious, I asked what he meant. He went on to share with me that on his new gaming system, there was a small avatar that sat in the lower right hand corner of the screen. According to my son, this avatar had no purpose whatsoever. It was not part of the game. It didn’t even move. It just sat there and blinked. The gaming company, it seems, has developed a system of buying “points” as imaginary money and with this money you can customize and dress your avatar in any way you wish. My son, perplexed by this, said “Dad, why would anyone buy something that has absolutely no value?”

My thoughts immediately went to the world I work in every day… the world of healthcare. CT scans for every headache in the ED? MRI for everyone with back pain? The list goes on.

As a physician, I do understand that the thought that goes behind these decisions is complex, but our current system has led some to pursue this type of behavior with incentives that are far from clinical. According to a recent survey by the Commonwealth Fund and Modern Healthcare, 93% of those healthcare leaders surveyed believe that current financial incentives for providers and other stakeholders are “extremely significant” or “very significant” barriers to the growth and adoption of new care models such as accountable care organizations. As we transition to a new system which places a greater value on quality, we as health care leaders have an obligation to ensure that these incentives are designed to assure true value is delivered. Let’s make sure we are no longer just “dressing the avatar."


HMO 2.0 - Which Comes First: Healthcare Reform or Payment Reform?

The term ACO is attributed to Dr. Elliot Fisher, well-known for his Dartmouth Atlas Project which demonstrates the wide variation in cost per Medicare beneficiary across the country as well as the lack of correlation between cost and quality (higher cost does not translate to higher quality).  In an effort to correct this trend, ACO pilot projects are already in the works, including Medicare as a result of the passage of the PPACA. 

Some of the primary goals of an ACO are to coordinate care across healthcare providers and control costs.  Determining the proper organization will be difficult, especially where physician-hospital relationships are strained.  However, controlling costs has always been the greatest challenge.  It seems that the "chicken or the egg" quandary persists - can you have healthcare reform without payment reform first?  Or - is it the other way around?