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How Accountable Care Organizations Can Prepare for Downside Risk

Fostering the right culture, implementing analytics, and improving care transitions will boost accountable care organization success with downside risk.

Accountable care organizations and downside risk

Source: Getty Images

By Jacqueline LaPointe

- Accountable care organizations (ACOs) are part of the foundation of the healthcare industry’s transition to value-based care and purchasing.

Since the passage of the Affordable Care Act (ACA), ACOs have realized clinical and financial improvements. Organizations in the Medicare’s largest ACO program average a quality performance score north of 90 percent, and CMS estimates that the program saved about $954 million from 2013 through 2015.

However, the federal government says ACOs could do more to reduce costs and improve care quality. And the organizations can achieve the goals through downside financial risk.

ACO programs with higher financial risk levels compared to the MSSP are generating greater savings. For example, Next Generation ACOs, which assume up to 100 percent downside financial risk, produced nearly $62 million in net savings to Medicare in just one performance period.

However, ACOs are generally risk-averse. The majority of MSSP ACOs (82 percent) currently participate in the upside-only risk track, and the track has been the most popular option since the program’s inception.

READ MORE: For Ongoing ACO Shared Savings, Look Outside Inpatient, Primary Care

Additionally, 71 percent of MSSP ACOs recently said they would consider quitting the program if CMS requires them to take on additional risk in the near future.

Transitioning from upside-only tracks is a huge risk for ACOs. Assuming downside risk requires capital to cover potential losses, large health IT infrastructure investments, tight partnerships with other providers, and other capabilities.

But ACOs may not have a choice. CMS is planning to overhaul the MSSP, requiring organizations to take on downside financial risk sooner. And private payers tend to follow in Medicare’s footsteps.

Organizations can continue to see financial and clinical improvements from participating in ACO contracts with downside risk. In the following article, will explore the strategies experienced ACOs and industry experts employ to achieve ACO success with downside financial risk.

Developing a culture for at-risk success

While data analytics, care coordination, case management, and other capabilities are all critical to earning shared payments, establishing a culture that aligns with the model’s goals should be an ACO’s first step to assuming downside risk.

READ MORE: Exploring Two-Sided Financial Risk in Alternative Payment Models

ACO leadership and culture were the most commonly cited characteristics of successful ACOs that improved quality and cut costs, according to a 2018 report from the Patient-Centered Primary Care Collaborative and the Robert Graham Center.

The literature review revealed that successful ACOs established a culture in which staff, clinicians, and administrators were all accountable for achieving quality and cost goals.

ACOs should start establishing a culture fit for at-risk ACO success from the top-down. Engaging the C-suite with financial risk adoption is key to enterprise-wide transformation and acceptance of new payment models.

CEOs, CFOs, and other leaders may be skeptical about putting their organization’s revenue at risk under certain ACO models. But starting a cultural change with the leaders will help providers make investments in necessary capabilities later.

“We're comfortable with the idea of risk in general. And that is something that organizations need to have as part of their DNA, as our CEO likes to say, in order to participate in models like the Next Generation model,” Peggy Chou, MD, Senior Medical Director of Performance Excellence at Atrius Health, recently told

READ MORE: The Future of Accountable Care Organizations Involves Risk

Additionally, ACOs should appoint physician champions to succeed in at-risk models. In 2017, the Health Care Transformation Task Force found that 11 successful ACOs engaged physicians and other frontline providers to increase buy-in and integrate practice improvement into daily workflows.

“There’s an inclusive and collaborative culture here that’s really crucial to getting buy-in,” an executive from a physician group-led ACO explained in the report. “If you’re going to get frontline people to change what they’re doing, it’s so much more helpful if from the very beginning they’re involved and telling you what would probably work best. And then, of course, they’re going to help design it. They’re going to then champion it.”

Data, data, and more data

Understanding and forecasting outcomes and costs is a top priority for ACOs looking to assume downside financial risk. Failing to accurately project the outcomes and expenses of the attributed population could result in significant financial losses and repayments.

ACOs need a complete picture of their attributed population to manage outcomes and costs. In other words, organizations should have volumes of reliable clinical, financial, and other information to paint a holistic view of their population.

Creating an enterprise data warehouse and bringing all the information into one system is key, according to Jeffrey Nelson, Millennium Physician Group’s Chief Information Officer. Millennium Physician Group was a Track 3 MSSP ACO that earned shared savings payments in 2016.

“It’s really about understanding how to reduce a lot of that redundancy based on the claims data and, also, integrate the clinical data into the system, so we get more of a holistic view of the patient – where they’ve been, what they’ve done, what care’s been provided – to ultimately give them a care pathway for better quality and, also, reduced cost,” he told

Data analytics were also key to Next Generation ACO success. Organizations in the risk-heavy model uses analytics tools to manage patient populations, monitor performance, and manage financial risk, CMS stated in the model’s first evaluation report.

The National Business Group on Health (NBGH) says that mature ACOs should have EHR and population health tools integrated at the patient level and within provider workflows. The organizations should also invest in predictive analytics systems and registries across all their providers and facilities.

The group also reports that mature ACOs should be doing their own analytics work, rather than waiting on payers to review claims data and send back reports on outdated information. High-performing ACOs have access not only to their own EHR data, but information from an entire network of providers. Leveraging that data is key to accurately forecasting costs and outcomes to avoid share losses later.

Improving care transitions

Accountable care models hold organizations responsible for total costs of care for an attributed population. So, ACOs could face financial losses for care provided outside of their physician offices and hospitals.

Therefore, ACOs should implement a care transition strategy that enables providers to discharge their patients to the most appropriate post-acute care setting.

Employing care transition coordinators helped Mercy Health improve their care transitions for success in risk-based models, the system’s Director of Post-Acute Care Services Ron Drees recently explained. The coordinators follow patients from the hospital to post-acute care facilities to home, ensuring care transitions are smooth and patients are appropriately treated.

“One of the keys for us in providing post-acute follow up for patients is identifying patients that our care transition coordinators will follow from the time they’re an inpatient at a Mercy Health facility through any additional care they will need beyond,” he said. “We identify those patients based on readmission risk rates. In Mercy Health’s hospital settings, those care transition coordinators will interact with those patients and let them know we’re following their care – whether that’s in the home or skilled nursing environment.”

The care transition coordinator enables Mercy Health to track outcomes and costs and prevent adverse events as the patient recovers. Traditionally, ACOs must wait on payers to analyze claims data and report it back to providers.

Establishing a network of high-quality, low-cost post-acute care providers is also key to risk-based ACO success, Chou from Atrius Health stated. Atrius Health recently completes its first performance period as a Next Generation ACO.

“In 2017, we built upon the work that we have done with managing our hospital costs and our transitions of care,” Chou stated. “One of our strategies was around transitions of care to make sure that patients were going to the right skilled nursing facility if they needed post-acute care.”

Atrius Health recently developed a network of preferred skilled nursing facilities to ensure attributed patients received high-quality care. The ACO also embedded providers in some of the preferred facilities to help post-acute care providers follow treatment plans and improve care transitions.

With the network, the ACO saw shorter lengths of stays and lower hospital readmissions rates, which are two metrics typically used to evaluate ACO performance.

The time for ACOs to become more accountable for their costs and outcomes is near. The federal government is pushing for ACOs to take on greater financial risk and leaders tailoring their programs to reduce the amount of time in upside-only tracks.

Assuming downside financial risk is risky. But ACOs are already seeing success under models with higher levels of risk, and organizations transitioning can follow in their footsteps by establishing the right culture, having the right data, and getting patients to the right setting.


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