4 Key Measurement Areas

Providers voluntarily participate in these programs, such as the Medicare Shared Savings Program (also known as MSSP), Advance Payment ACO Model, or the ‘early adopter but now closed to new groups’ Pioneer ACO Model, and all providers get to share a portion of the savings if the network is able to deliver quality patient care that meets Medicare’s minimum quality performance standards.

This is measured in four key areas:

 

1. Patient experience   2. Care coordination/patient safety   3. Preventive health, and   4. At-risk population)

 

This care is to be provided at a cost that meets or exceeds Medicare’s Minimum Savings Rate (MSR). The downside is that if the ACO has accepted a two-sided risk model and it exceeds a Minimum Loss Rate (MLR), then the ACO must then pay back a portion of the losses it generates (known as shared losses).8

 

Risk Sharing

ACOs can choose either a one-sided risk model (where a smaller percentage of the money they’ve saved in providing care is shared by the ACO’s providers), or a two-sided risk model (where a larger percentage of savings, but losses as well, are shared by the ACO’s providers), for their first 3-year period in a shared savings plan (ACOs who successfully complete their first 3-year agreement period may opt for a second agreement period under this model). This gives organizations with less experience being at risk a chance to gain some experience with population management before transitioning to a two-sided model in which they will be at risk for losses as well. ACOs are able to choose among varying levels of shared savings in the two-sided model that correlates with the amount of risk they are willing to take on.

As a reference point, in 2016 61% of the Medicare Shared Savings Program ACOs were able to earn shared savings. In 2018, of the 562 MSSP ACOs (between 850 and 1,300 total including commercial insurance and others), 101 of those are participated in two-sided, risk-based models.9

Bundled Payments

The Bundled Payment model was designed to provide some incentive to the provider for giving quality care, while reducing costs at the same time. It has some other benefits as well. Bundled payment models pay all of the providers involved in the patient’s episode of care for providing, and coordinating, the total amount of services required. And while it sounds complicated, the payment model has a valuable upside for the providers—it allows them (and the payer) to embrace value-based care without fully immersing them in the financial risk contracts that can have serious consequences.10 As an example, if a patient has surgery, the payer would traditionally reimburse the hospital, surgeon, and anesthesiologist separately for their part in the procedure. Using a bundled payment model, the payer would collectively reimburse the providers involved using a set price for the episode of care. This payment is usually based on historical cost data for that exact procedure. Providers who incur extra costs during the care of the patient must bear that financial responsibility alone, but the practice does encourage standardized, cost-effective decisions regarding the patient’s care.11 So, while not completely protected from financial downsides inherent in the arrangement, the risks are far less than in other alternate payment model options. And if the provider is able to care for the patient at a cost that is less than the reimbursement amount, they get to keep the difference.

Providers for a patient’s particular episode of care all paid collectively for their roles at pre-determined rates Upside: providers keep difference if care provided is less than actual costs Downside: if care costs more than bundled payment, provider must still provide care

 

Payments are doled out in a couple of different ways.

One option is for the payer to reimburse just one of the entities and they, in turn, pay the rest of the providers for their role in the episode of care. Another option is for the payer to pay each participating provider for their role, with the total amount paid not to exceed the predetermined amount for that episode.

Single entity gets paid by insurer, in turn pays other providers, or Payer pays each provider separately Other alternatives

 

There are, actually, several different models for bundled payments, and CMS has taken the lead in developing them. In 2013, CMS established the Bundled Payment for Care Improvement (or “BPCI”) in an effort to promote better care coordination among providers and facilities. The program currently reimburses participants for 48 different types of episodes of care, but this is expected to increase.12

There are four options (or tracks) in the BPCI. In the first track, hospitals are paid for an inpatient, acute care stay, while participants in the second and third models are reimbursed on a retrospective bundled payment system. The fourth track makes a single, prospective payment to hospitals.

Following the success of the BPCI, CMS introduced the Comprehensive Care for Joint Replacement bundled payment model.13 This model is intended to boost care coordination between hospitals, skilled nursing facilities, rehabilitation centers, and home health agencies during joint replacement surgeries.