A Virtual Accountable Care Organization (ACO) and the link to Pediatric Practices

With Healthcare costs increasing at a rapid rate in the United States, there are a number of payment models being investigated that look to encourage preventative care while reducing costs. Although most practices generate the majority of their revenue from Fee for Service insurance products, there is much talk as well as movement related to Accountable Care Organizations (ACOs). The concept of ACOs is that an organization manages a large group of providers and hospital systems to provide patient care. The ACO and the providers would be compensated for management of a population. The leaders in this field are exploring many different methods for payment – a set fee per patient for all care, bundled payment per episode of care as well as other risk sharing arrangements. ACOs are most thought about as hospital systems that purchased provider groups (e.g. Integrated Delivery Systems) and form an ACO entity. In this case, the Pediatric Group would need to be owned by the hospital system to participate in the ACO.

Although the Medicare Shared Savings Program ACO sponsored by the Centers for Medicare and Medicaid Services (CMS) has the most publicity, the commercial payers are beginning to experiment with ACO payment models as well. The Medicare Shared Savings Program ACO shares the savings of ACO effort between the ACO and CMS (the providers continue to receive Fee for Service payments at this time).

There is another type of ACO model known as the Virtual ACO or community ACO. This model would be an organization that is the contracting agent with payers and would like to privately owned practices. For example, ABC Pediatrics (privately own), could participate in a virtual ACO without selling their practice. The virtual ACO would develop the guidelines on how to participate as well as the payment stream. There is much question as to how this will impact Pediatrics. The good news is that private practices should not be required to sell their practices as the ACO model evolves.

Practices and practice managers should continue to keep an eye on the payment methods in the field. Improper coding as well as low collection rate continues to be a very common issue with Practices that if managed appropriately, optimize the revenue to the practice. In Pediatrics, this requires a team that receives routing training in Pediatric coding, systems that gain intelligence as payers change reimbursement policies and consistently reporting and follow-up. So although there is much talk and experimentation with new payment models, most practices need to look how to appropriately manage the revenue cycle in today’s payment system.