Factors Physicians Should Consider When Participating in ACOs

July 31, 2014

Physicians have a multitude of options when structuring ACOs. Make sure you understand all the legal requirements before committing your practice.

Physicians have a multitude of options when structuring accountable care organizations (ACO). One of the benefits of participating in a CMS approved ACO is the ability to take advantage of the Medicare Share Savings Program (MSSP) and waivers that insulate the ACO from violating federal laws such as the Anti-kickback Statute.

It is important for physicians to make sure certain requirements are met before participating in the MSSP:

• Participate in Medicare.

• Have a minimum of 5,000 beneficiaries enrolled by physicians in the ACO.

• Create the ACO as a separate legal entity.

• Select a group or board of directors that provides oversight and strategic planning. Seventy-five percent should be ACO participants and one Medicare beneficiary representative.

• Goal planning should be focused on improving the quality of care and reducing the delivery cost. Another important item is patient satisfaction.

• Establish cost and quality benchmarks and always consider the downside risk.

Along these lines, providers should look at two general types of ACO structures - "subsidiary ACOs" and "participant-owned ACOs." A subsidiary ACO is best analogized to a subsidiary corporation. In the ACO context, it is usually a wholly owned entity of a hospital or health system with medical staff having an ownership interest. By way of contrast, a participant-owned ACO consists of a variety of providers (i.e., medical groups and independent physicians) with an equal equity ownership. In either case, governance requirements and composition should be considered. These items are the first stage to connecting quality and financial reward.

Cost and quality benchmarks cannot be overlooked. These drivers are what enable the individual ACO's financial incentive system to be established. In turn, these quality metrics should drive the internal review process. These will enable the ACO to establish performance improvement and remedial actions based on meeting of the set measures.

These are just the starting points. Physicians and other participants need to address a variety of items and make sure that the requisite policies and procedures are in place.