The Future Medicare ACO Hinges on Resolving their Current Issues

It’s been a long time since the U.S. federal government launched the Affordable Care Act. The ACA, also known as Obamacare, has sparked optimism about the future potential of Medicare ACOs. They seemed like a beacon of hope for revolutionizing the vast healthcare industry. However, things do not always go exactly as they appear to. The industry has faced major challenges on two fronts. On one side, healthcare was shifting to a value-based care model. Likewise, the implementation of ACO Medicare brought different formidable challenges.

Crosson’s Optimism about Medicare ACOs Success

During the fall meeting of NAACOs, Francis J. Crosson, MD, pointed out these things clearly. He is the past chair of the Medicare Payment Advisory Commission (MedPAC). The current chair of MedPAC and co-editor-in-chief of AJMC is Michael E. Chernew. He further joined Francis in the discussion about the future of value-based care. According to Carosson’s perception, the nuances faced by the Medicare ACOs have cited some triggering factors. He believed that MedPAC was a strong advocate of ACO Medicare. That’s why, in his presentation, he has accounted for the four hurdles outlined in the June 2020 MedPAC report. Crosson also showed optimism about resolving these hurdles for the success of the ACO movement.

In today’s blog, we will be discussing the four hurdles outlined by Corsson.

Unfamiliarity of Medicare Beneficiaries with ACOs

It is one of the main reasons behind the difficulty of implementing ACOs. Medicare beneficiaries probably do not have a sufficient understanding of Medicare ACOs. Therefore, they haven’t shown much inclination towards enrollment and collaboration. Here, Crosson sheds light on the success of Medicare Advantage for effective enrollment advertising.

The ACOs find themselves in an equally challenging position. Therefore, they have to go the extra mile to resolve the issue. First, ACOs must give consideration to beneficiary education. In the meantime, they must invest in some beneficiary-centric incentive programs. It will help a lot in grabbing the suitable attention of Medicare beneficiaries. Then they will start accepting and collaborating with MSSP ACOs.

Lack of Incentive to Handle Rising Medicare Part D Drug Costs

Medicare Part D drug costs have shown an upward trajectory over time. This alarming rise in prescription drug costs demands a solution. Despite this, ACOs have an incentive deficiency to cope with these increasing cost challenges.

But Crosson emphasizes that ACOs have the potential to be that solution. Crosson underscores the urgency of the matter. Thereby, he suggests that integrating Part D spending into the ACO benchmark should be considered. Anyhow, this idea faces resistance among MedPAC members. A more practical approach, however, could involve CMS actively facilitating voluntary associations. These associations can promote incentive sharing between ACOs and Part D plans.

Financial Conflicts of Hospitals

The majority of hospitals rely on the traditional "heads in beds" revenue model. However, the real potential for savings lies in the efficient management of two aspects. One is hospital care costs, and the other is prescription drug costs. Dr. Crosson highlights the critical issue that ACOs may face: a limited range of cost-saving opportunities without the ability to address these key areas. This challenge of aligning the financial interests of hospitals with those of ACOs could offer insights into why physician-led ACOs tend to outperform their hospital-owned counterparts.

ACOs still Adhere to fee-for-service (FFS) payment models.

Crosson raised a valid point: if FFS leads to overutilization, why stick with it? Comparatively, in Europe, FFS succeeds because it operates under a global budget framework. In the United States, Medicare ACOs should reconsider their payment methods. Therefore, they must move away from excessive FFS.

Adding to this, Chernew pointed out that despite discussions on the value of alternative payment models (APMs), fiscal performance primarily drives their adoption. It is particularly due to the federal government's financial pressures. Interestingly, the commercial sector faces similar financial challenges as the Medicare program.

Conclusion

These insights are quite compelling. They don’t advocate for expansive disease management programs. Instead, they underscore the importance of a more focused approach: addressing low-value care. The evidence strongly supports this perspective. Also, it indicates that cost savings and quality enhancement do not necessarily result from increased spending or widespread patient testing. Instead, the key lies in eliminating superfluous care and transitioning to more efficient care settings. It is a strategy that brings both financial benefits and quality improvements to Medicare ACOs.

Read more: What is the Role of Medical Billing in Excellent RCM?

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