ACO Represents A Business Shift For Most Hospitals And Physicians

The healthcare reform law is intended to encourage the development of physician and hospital partnerships, such as accountable care organizations (ACOs), around shared payments from the Centers for Medicare and Medicaid Services (CMS).

For many industry experts, ACOs hearken back to global capitation payments from the 1990s. Under capitation-type models, a single global payment is made to an entity, then divided into professional fees (physician) and technical fees (hospital). Fees are withdrawn for administrative services (such as billing and collecting) and other fees are withheld from providers to account for reserves, unexpected payments, catastrophic reinsurance, out-of-network services and bonuses for quality metric-driven performance. Payments are then made on a per-member, per-month (PMPM) basis.

Under ACOs, members of the healthcare system assume joint accountability for a defined patient population and are tasked with providing quality care and reducing overall costs associated with this care. Reimbursements are bundled so that similar services are grouped together and compensated using a single or global payment. Startup cost estimates for ACOs vary. CMS estimated $1.8M in the proposed rules, while a study completed by the American Hospital Association presented a range of $12–$26M.

Access the complete white paper to learn how providers can successfully manage their defined patient populations under the ACO model.