The Next Steps for Accountable Care Organizations, Bundled Payments, and Health Reform

Topics: Health care, Medicine, Health insurance Pages: 20 (4617 words) Published: May 31, 2014

The Next Steps for Accountable Care Organizations, Bundled Payments, and Health Reform The University of Texas at Dallas
The American Health Care System
HGMT 6320

The Next Steps for Accountable Care Organizations, Bundled Payments, and Health Reform

With the enactment of the Patient Protection and Affordable Care Act (PPACA) in March 2010, health care reform has become the law. The legislation will extend health care coverage to more citizens, stabilize health insurance markets, enhance regulation and consumer protection, and improve the affordability and quality of health care in the United States. Changes in payment system of health care proposed by PPACA have led to the development of Accountable Care Organization (ACO). This paper will address how ACOs and the bundled payments system will impact the future of health care.

The ACO is a health care organization which provides accountability for quality, cost, and care for medical beneficiaries with single entity providers that are responsible for delivering care. The ACO-model builds on the Medicare Physician Group Practice Demonstration and the Medicare Health Care Quality Demonstration, established by the Medicare Prescription Drugs Improvement and Modernization Act of 2003. Under the Affordable Care Act, the U.S. Department of Health and Human Service (HHS) released new rules that benefit doctors, hospitals, and other health care providers of better care for Medicare patients through ACOs on March 31, 2011(U.S. Department of Health & Human Services, 2001). According to the Centers for Medicare & Medicaid Services’ (CMS) administrator Donald Berwick, MD, “An ACO will be rewarded for providing better care and investing in the health and lives of patients. ACOs are not just a new way to pay for care but a new model for the organization and delivery of care” (Penton Media., 2011). The new model, which is called the “Pioneer Accountable Care Organization,” is to improve the quality of care for Medicare Fee-For-Service (FFS) beneficiaries (Medicare Parts A and B) and reduce unnecessary costs through establishing a shared savings program, which promotes accountability for Medicare FFS beneficiaries. It requires coordinating care for services provided under Medicare FFS and encourages investments in infrastructure, and it redesigns care processes. Regarding the differences, the Pioneer ACO payment model incorporates a population-based payment in the third year of the ACO’s Participation Agreement. This population-based payment will replace fifty percent of the FFS payments (McDermott & Emery, 2011). The Pioneer ACO model is estimated to save Medicare as much as $430 million over three years by coordinating with private payers to reduce costs for Medicare beneficiaries and improve health outcomes. An ACO may engage in either a Shared Savings Program or in the Pioneer ACO model. In addition, the Pioneer ACO model is separated from the Medicare Shared Savings Program for Medicare beneficiaries by the Advance Payment Initiative (Center for Medicare and Medicaid Innovation Center, 2011).

ACOs require the ability to manage cost and quality for patients across the continued extent of care and across different associational settings. They also require the capability to plan budgets and resources needed to allocate payments, and the commensurable size of primary care providers for Medicare patients’ populations assigned to the ACOs (at least 5,000 Medicare or 15,000 commercial patients). According to the Journal of the American Medical Association, doctors Shortell and Casalino recommend a three-tiered system of qualification for ACOs (Shortell, S. and Casalino, L., 2010). The tiers will be based on the degree of financial risk acceptable for ACOs and the degree of financial rewards that can be completed by performance targets. In the first tier, ACOs will receive FFS payment with shared savings for providing quality care at lower than the expenditure...

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