An ACO rookie’s most common mistake
To stay competitive in an evolving healthcare landscape, independent small physician practices are creating their own Accountable Care Organizations (ACO). It’s important for them to have accurate expectations before applying to Center for Medicare & Medicaid Services (CMS) and its Shared Savings Program.
Unfortunately, new ACO applicants often miscalculate the number of CMS patients, or “attributed lives,” they are responsible for, putting their entire cost structure at risk.
Whose patient is it?
CMS assigns each patient to a provider who will be responsible for that patient’s cost and quality of care. A sophisticated algorithm determines where this patient belongs, based on claims data.
A smaller primary practice may assume that every History and Physical (H&P) it performs for Medicare patients will count toward its attributed lives total, when in fact that is not the case.
For example, if that patient sees a specialist who also conducts an H&P (potentially unnecessary duplication) then provides additional services and fees, that specialist will likely earn the attributed life from CMS.
So it’s not always the primary care provider that earns the attributed life, and it’s very hard for practices to determine ahead of time.
The risk of getting it wrong
One of two things can happen if the practice overestimates the number of attributed lives:
1. CMS rejects the ACO application. At that point, if the CMS window is open to do so, they can join another ACO group. Otherwise, the practice will not be part of an ACO.
2. Maybe the practice still qualifies to be an ACO, but CMS assigns a substantially lower number of patients. This outcome is particularly dangerous to practices that have built their cost structure around the expectation of a certain number of patients. If a practice expects 15,000 lives, but earns only 8,000 lives from CMS, its shared savings income would be much lower than expected.
Neither option is desirable; it’s important to go into the ACO application process with appropriate expectations. Allscripts is now offering a service to help small practices estimate attributed lives. Download a white paper or contact us if you’d like to learn more.