The pandemic has accelerated provider CFOs’ interest in moving toward alternative payment models (APMs) according to a Premier survey, and it’s turning up the heat on the gateway APM: accountable care organizations (ACOs).
ACOs bring together physicians and hospitals and take accountability for their providers’ clinical and financial experience for a defined set of patients. New ACOs must form networks and existing ACOs must constantly refine and curate their network composition in order to meet strategic, financial and operational goals.
In the early years following passage of the Affordable Care Act, many ACOs focused on engaging any willing providers to meet strategic and operational goals, including alignment, care delivery, market share, volume or contract requirements. However, this strategy often resulted in variation in care patterns and utilization across providers ─ limiting organizations’ ability to maximize performance in two-sided and/or global risk contracts.
The providers in the ACO network significantly affect the performance of the ACO.
ACO networks help health systems align with providers in the market, improve quality outcomes and patient experience of care, and ultimately increase market share through these new affiliations and relationships. ACOs also confer operational benefits to the health system and providers, such as reporting quality for network providers for the Merit-based Incentive Payment System (MIPS).
ACOs, new or existing,need to understand the strategic, financial and operational implications of network composition decisions. ACOs are held accountable to a benchmark that is comprised of the expenditures of the beneficiaries that are attributed to the ACO network’s participating providers.
Accordingly, ACOs must balance the strategic and operational benefits with the financial implications that stem from ACO network composition decisions. As the shift to value-based payment models increases, the need to methodically curate ACO network composition is even more important.
To succeed, ACOs need actionable data to understand performance and evaluate downstream implications of ACO network composition changes.
ACOs need to understand the attribution and expenditures providers may contribute to the network, as well as the impact on other model parameters, other programs, and strategic and operational goals.
Key steps to define and assess optimal network composition include:
1. Defining the impact parameters that are important to your organization. We recommend focusing on:
- Attribution: A broad network composition strategy can help ACOs meet program requirements by targeting physicians that can bring sufficient volume of patients to meet minimum attribution requirements for CMS models or commercial ACO contracts that require certain types of providers to be included in the network. Premier analyzed performance relative to ACO size and found that ACOs with a larger number of beneficiaries experience more consistent results, though higher numbers of providers and beneficiaries may increase variability in care and require more operational resources for engagement, reporting and care redesign efforts.
- Provider performance: A crucial step in network composition decision-making is understanding both the historical and current expenditure and risk score of providers that ACOs consider adding or removing from their network. An ACO must consider their ability to onboard new providers to their standard care processes so that they can achieve shared savings. It is also important to understand the interplay of the model methodology with these decisions. In MSSP, benchmarks are set at the start of the contract cycle, thus historical performance of new providers added during the contract cycle has limited impact on the benchmark. The overall ACO risk score can shift the benchmarks during the contract cycle; however, risk scores are capped at +/- 3 percent over the course of a contract. Accordingly, an ACO will want to review the risk scores and documentation and coding practices of potential new providers.
- ACO classification: For Medicare Shared Savings ACOs, CMS rewards “low-revenue” ACOs, or ACOs that do not include hospitals or high-cost specialists, by allowing them more time in upside-only risk and reduced downside risk exposure. Including high-cost providers or hospitals may classify an MSSP ACO as “high revenue.” This consideration must be balanced with broader goals of engaging specialists.
- MACRA/QPP status: The MACRA Quality Payment Program (QPP) includes thresholds to determine whether providers qualify for a 5 percent AAPM bonus based on the ACO network’s overall percentage of revenue and attribution that fall under a qualifying Advance Alternative Payment Model. In practice, if an ACO has providers that have low attribution, such as specialists, it can dilute the threshold calculation and limit the ability to earn AAPM bonuses. It is important to identify the specific contribution of ACO network providers, including advanced practice providers, to the AAPM calculations along with the operational considerations of providers that have benefited from the MIPS-APM reporting structure to shift to MIPS reporting, along with the costs associated with MIPS reporting.
2. Ensure access to data that measures performance on the value drivers.
Providers need the capability to assess number of attributed lives; total average per beneficiary per year (PBPY) total and by type (ESRD, AND, etc.) expenditures by provider NPI and affiliated practices by year for 2017–2019; and group totals for each affiliated provider. Understanding a provider’s performance over time is essential to refining an ACO composition and long-term success.
3. Access or develop a provider performance evaluation tool to monitor provider performance.
Once the provider performance evaluation tool is in place, continual monitoring of providers’ performance is essential to ascertain the provider’s contribution, or lack thereof, to the ACO. ACOs may also use this tool to assist in distribution of shared savings/risk sharing.
4. Conduct scenario analyses to project value-based contract/model performance based on various provider network compositions.
Scenario analysis allows the ACO to model high/low revenue, evaluate a provider’s performance over time, and project benchmark and number of attributed beneficiaries to curate the optimal ACO composition.
5. Evaluate the downstream implications of making network alterations.
Before adding or removing a provider, it is important to consider the organization’s overall strategic plan, other contracts that may be impacted, MIPS reporting, disrupters in the market and other implications, such as impact to the ACO’s benchmark and risk scores.
Done well, an ACO’s network composition strategy helps the health system meet its strategic goals.
ACO networks help health systems align with physicians in the market, improve quality outcomes and patient experience of care through concerted care redesign efforts, and ultimately increase market share through these new affiliations and relationships.
With the right data in hand, ACOs can optimize their network composition, improve patient outcomes and drive financial savings.