GE Healthcare Camden Group Insights Blog

Understanding the Risks and Benefits of Medicare ACO Models

Posted by Matthew Smith on Mar 30, 2015 8:30:00 AM

The recent announcement by the Centers for Medicare and Medicaid Services (“CMS”) of the implementation of the Next Generation (“NG”) ACO model further solidifies the government’s intention to expediently transition to more value-based reimbursement methodologies. The release of the NG ACO model coupled with the clear direction from the Department of Health and Human Services (“HHS”) that it has established the goal and framework to increase payments tied to quality or value through alternative payment models to 30 percent of traditional Medicare payments by the end of 2016, and 50 percent of payments to models such as ACOs or bundled payments by the end of 2018 sends a strong message to providers that value-based payments and increasing risk-based structures are rapidly evolving. It is increasingly important that healthcare providers not only assess their readiness for the new models, but understand the different characteristics of each and determine the best fit for their organization. Whether or not an organization chooses to participate in the currently available models, the key to success is conducting a well-informed assessment of whether to participate, when to participate, and which model is best suited for the organization. Likewise, organizations that are already participating should assess their Medicare strategy on an ongoing basis.

Should You Participate?

As mentioned and as shown in Figure 1, CMS has issued fairly aggressive goals for transitioning to value-based payment methodologies, which have been further supported by the announcement of the NG ACO model. 

ACO_Figure_1Simultaneously, the overall impact of the Affordable Care Act (“ACA”) has incentivized more efficient care delivery, changed payment methodologies and generally put pressure on hospital operating margins. Hospitals and health systems that historically and largely still today rely on fee-for-service reimbursement face an ongoing quandary of protecting volume to maintain revenues versus transitioning to value-based models where the focus is the right care, at the right time and right place with increased overall value. While hospitals and other healthcare providers are impacted differently, the broad impact is a shift from inpatient to outpatient services (shown in Figure 2) and significant consolidation of the market (shown in Figure 3).

ACO_Fig2Clearly, the healthcare delivery system is changing and aligning to provide more coordinated care; and regardless of the market in which a healthcare provider operates, pressure for change is palpable.

When determining whether or not to participate in one of the Medicare ACO models; or for those that are already participating and assessing their future direction, organizations need to determine how rapidly their market is changing, the implications of the model characteristics, the size of the fee-for-service Medicare market vs Medicare Advantage, their experience with managing risk, the degree to which they are already taking steps to redesign their care ACO_figure3models, the strength of their provider network across the continuum, the size of their patient base, and the difference in financial incentives across models as well as the degree of risk aversion or acceptance for the organization. There are benefits and pitfalls to each of the Medicare ACO models, and the proposed changes to the Medicare Shared Savings Program (“MSSP”) together with the NG ACO structure show that CMS is taking provider experience and comments into consideration as revisions to existing and frameworks of new models are being developed.

When Should You Participate?

There have been mixed results in the MSSP. For example, according to CMS in Performance Year 1:

  • 58 MSSP ACOs held spending $705 million below their targets and earned performance payments of more than $315 million as their share of program savings.
  • One ACO in Track 2 overspent its target by $10 million and owed shared losses of $4 million.
  • 60 ACOs reduced health costs compared to their benchmark, but did not qualify for shared savings, as they did not meet the minimum savings threshold.

And, in the Pioneer ACO Model Performance Year 2:

  • Pioneer ACOs generated estimated total model savings of over $96 million and at the same time qualified for shared savings payments of $68 million.
  • According to the Brookings Institution, 13 Pioneer ACOs reduced costs enough to qualify for shared savings, with an average of $5.85 million returned to the ACOs, ranging from $1million to $14million. One ACO owed shared losses of $2.55 million. The remaining 18 ACOs were within the minimum savings or loss rate and did not earn shared savings or owe money to Medicare due to losses.

However, CMS is making changes to the programs to make them more attractive and to encourage a greater degree of risk taking. Specifically, the proposed rule for MSSP seeks to address the flawed methodology that is used for setting, updating, and resetting an ACO’s benchmark that currently is based on historical performance and introduces a third track with increased risk sharing, among other changes. And, the NG ACO offers increased risk and reward along with a revised benchmarking methodology. Thus, at a time when market dynamics are changing rapidly, and CMS continues to fine tune the structure of the ACO programs, timing of the participation decision is extremely important. Healthcare provider groups and organizations should explore the Medicare ACO models and the implications of each structure to their individual organization and the ramifications of the changes in programs, regardless of whether they are making the decision to participate or deciding whether to change models. Staying ahead of the changes and timing the decision so as to best support the organization’s goals and objectives is recommended.

Which Model is Best for You?

Organizations considering the choice of Medicare ACO models should assess the individual characteristics and capabilities of their organization, the market in which they operate, and the structure, risks and opportunities under the available Medicare ACO models. One of the main considerations for most organizations is the degree to which they are at risk and the extent of sharing in savings. Table 1 depicts a summary of the models available under MSSP and NG ACO.

ACO_table1While increasing focus is being placed on migration to risk as evidenced by the proposed Track 3 under MSSP and the introduction of NG ACO, many provider organizations continue to participate in the Track 1 of MSSP (no downside risk). If revisions to the MSSP program are implemented (as currently proposed), the model may become even more attractive to organizations that have previously opted not to participate but aren’t prepared to take on the level of risk required in NG ACO. On the other hand, the NG ACO model provides an alternative to those organizations that are more advanced in their population health model and ability to manage risk, whether that be organizations currently participating in the Pioneer or MSSP ACO programs, or organizations that have previously not participated. If the Track 3 option is indeed added to MSSP, there will be a range of risk sharing from 40 percent to 100 percent across the models, with a variety of structural characteristics that should also be considered.

With the rising demand from government and commercial payers, employers, and the general public to improve the value of healthcare delivery, provider organizations must continually review their readiness to transition to these new models as well as the appropriate structure to support their ongoing success. Having a detailed plan and projecting overall impact to the organization is critical as is timing of decision-making and implementation. The decision is no longer simply whether or not to participate in Medicare ACOs, but rather, as the system evolves, when should providers engage in or change models and which model will lead to the best outcomes. Making the right decision for the organization is imperative.

Next Generation ACO, ACO, Accountable Care Organization, The Camden Group

Topics: ACO, MSSP, Accountable Care Organization, Next Generation ACO Model, MSSP ACO

The Top 10 ACOs Ranked By Earned Payments

Posted by Matthew Smith on Dec 9, 2014 10:39:00 AM

ACO, Accountable Care Organization, MSSP, Top 10The list below, compiled from CMS' Medicare Shared Savings Program ACO Performance Year 1 dataset, shows the top 10 ACOs ranked by earned payments. Each ACO started its program agreement in 2012 and earned its performance payments by providing complete and accurate reporting for all quality measures. Earned shared savings equal 50% of the ACO's generated savings (minus an adjustment for sequestration). The information reflects totals as of October 2014.

1. Memorial Hermann Accountable Care Organization

State: Texas
Earned Shared Savings payments: $28,338,705
Assigned beneficiaries: 34,430
Generated savings: $57,834,092
Savings as percent of benchmark: 11.5%

2. Palm Beach Accountable Care Organization

State: Florida
Earned Shared Savings payments: $19,388,729
Assigned beneficiaries: 36, 268
Generated savings: $39,568,835
Savings as percent of benchmark: 6.5%

3. Catholic Medical Partners - Accountable Care IPA

State: New York
Earned Shared Savings payments: $13,682,060
Assigned beneficiaries: 33, 253
Generated savings: $27,922,572
Savings as percent of benchmark: 7.0%


State: Michigan
Earned Shared Savings payments: $12,094,617
Assigned beneficiaries: 17,303
Generated savings: $24,682,891
Savings as percent of benchmark: 9.1%

5. RGV ACO Health Providers

State: Texas
Earned Shared Savings payments: $11,900,756
Assigned beneficiaries: 7,089
Generated savings: $20,239,381
Savings as percent of benchmark: 14.4%

6. ProHEALTH Accountable Care Medical Group

State: New York
Earned Shared Savings payments: $10,737,854
Assigned beneficiaries: 28,651
Generated savings: $21,913,987
Savings as percent of benchmark: 6.1%

7. Triad HealthCare Network

State: North Carolina
Earned Shared Savings payments: $10,537,755
Assigned beneficiaries: 40,944
Generated savings: $21,505,622
Savings as percent of benchmark: 4.6%

8. WellStar Health Network

State: Georgia
Earned Shared Savings payments: 9,738,884
Assigned beneficiaries: 45,732
Generated savings: $19,875,274
Savings as percent of benchmark: 3.7%

9. MaineHealth Accountable Care Organization

State: Maine
Earned Shared Savings payments: $9,406,443
Assigned beneficiaries: 48,273
Generated savings: $19,196,711
Savings as percent of benchmark: 3.3%

10: Accountable Care Coalition of Texas

State: Texas
Earned Shared Savings payments: $9,357,388
Assigned beneficiaries: 33,739
Generated savings: 19,096,711
Savings as percent of benchmark: 3.5%

proposed rule issued by CMS this past Monday, December 1, aims to encourage additional participation in the MSSP by reducing provider risk. The proposal, which is open to public comment until Feb. 6, states: "As shown in our impact analysis, we expect the proposed changes to result in a significant increase in total shared savings, while shared losses would decrease."

MSSP, Accountable Care, Population Health

Topics: ACO, MSSP, Accountable Care Organization, Top 10

CMS Releases New Proposal to Improve Accountable Care Organizations

Posted by Matthew Smith on Dec 1, 2014 5:42:00 PM

Courtesy of The Centers for Medicare & Medicaid Services (CMS) 

ACO, CMS, Accountable Care OrganizationThe Centers for Medicare & Medicaid Services (CMS) today released a proposal to strengthen the Shared Savings Program for Accountable Care Organizations (ACOs) through a greater emphasis on primary care services and promoting transitions to performance-based risk arrangements. The proposed rule reflects input from program participants, experts, consumer groups, and the stakeholder community at large. CMS is seeking to continue this important dialogue to ensure that the Medicare Shared Savings Program ACOs are successful in providing seniors and people with disabilities with better care at lower costs.

CMS Administrator Marilyn Tavenner said, “This proposed rule is part of our continued commitment to rewarding value and care coordination – rather than volume and care duplication. We look forward to partnering with providers and stakeholders to continuously refine and improve the Medicare Shared Savings program.”

Through the Affordable Care Act, ACOs encourage doctors, hospitals and other health care providers to work together to better coordinate care when people are sick and keep people healthy, which helps to reduce growth in health care costs and improve outcomes. ACOs become eligible to share savings with Medicare when they deliver that care more efficiently while meeting or exceeding performance benchmarks for quality of care. 

The Shared Savings Program now includes more than 330 ACOs in 47 states, providing care to more than 4.9 million beneficiaries in Medicare fee for service. Recently, CMS announced first year Shared Savings Program (SSP) results:

  • 58 SSP ACOs held spending below their benchmarks by a total of $705 million and earned shared savings payments of more than $315 million. 
  • Another 60 ACOs had expenditures below their benchmark, but not by a sufficient amount to earn shared savings.

Other Affordable Care Act initiatives to improve care and reduce costs have helped reduce hospital readmissions in Medicare by nearly 10 percent between 2007 and 2013 – translating into 150,000 fewer readmissions – and quality improvements have resulted in saving 15,000 lives and $4 billion in health spending during 2011 and 2012.

CMS is seeking comment on a number of adjustments to improve the Medicare Shared Savings Program, including:

Providing more flexibility for ACOs seeking to renew their participation in the Program.

Many ACOs elect to enter the Program under a one-sided risk model, where the organization participates in shared savings with the Medicare program, but does not take on additional performance-based risk. More experienced ACOs that are ready to share in financial losses in return for the opportunity for a higher share of savings may elect to enter a two-sided model. CMS is proposing to give ACOs the option of a longer lead time to transition to a two-sided performance risk model after their first agreement period. ACOs would have the opportunity to renew under the one-sided model for one additional agreement period. ACOs that enter the Shared Savings Program under the two-sided performance risk model would see no change.

Encouraging ACOs to take on greater performance-based risk and reward.

CMS is proposing to create a new two-sided risk model, called “track 3,” which integrates some elements from the Pioneer ACO model, such as higher rates of shared savings and prospective attribution of beneficiaries - a list of assigned beneficiaries provided at the start of the performance year, and no further beneficiaries will be added to the list during the performance year.

CMS is seeking comments on a number of care coordination tools that would make two-sided performance risk models more attractive to ACOs such as expanded use of telehealth, beneficiary attestation, and more flexibility around post-acute care referrals to help ACOs better coordinate care for beneficiaries using these services. These tools could all help encourage participating providers to improve quality and care coordination for Medicare beneficiaries, which in turn would result in better patient experiences and greater shared savings for both the ACO and the Medicare program.

Emphasis on primary care.

CMS proposes to refine the way Medicare beneficiaries are assigned to an ACO to place greater emphasis on primary care services delivered by nurse practitioners, physician assistants and clinical nurse specialists and to allow certain specialists not associated with primary care to participate in multiple ACOs.  

Alternative methodologies for benchmarks.

CMS seeks comment on alternative methodologies that would make ACO benchmarks for determining shared savings and losses gradually more independent of the ACO’s past performance and more dependent on the ACO’s success in being more cost efficient relative to its local market. For example, CMS is considering whether shared savings received by an ACO should be added back to the benchmark in future performance periods.

Streamlining data sharing and reducing administrative burden.

CMS proposes to streamline the process for ACOs to access beneficiary claims data necessary for health care operations such as quality improvement activities and care coordination while retaining the opportunity for beneficiaries to decline to have their claims data shared with the ACO.

A fact sheet with more information about the proposed rule is available at:

The proposed rule will be open to a 60-day comment period.

The proposed rule is available for viewing at:

Comments may be submitted at:  

This rule is scheduled to be published in the Federal Register on 12/08/2014 and available online at

Topics: ACO, Accountable Care Organization, CMS, Affordable Care Act

ACO Survey Findings and Comments on Quality Benchmark Rule

Posted by Matthew Smith on Nov 17, 2014 6:02:00 PM

ACO News, Accountable Care Organization, CMSThe National Association of ACOs (NAACOS) announced new results to its ACO Tracking Survey. Their report provides updates to the likelihood of ACOs staying in the Medicare Shared Saving Program and the ongoing operational costs of ACOs. The results from the October 2014 survey show that two out of three (66%) MSSP ACOs are highly unlikely or somewhat unlikely to remain in the ACO Program. An additional 26% are undecided. This resulted in only 8% of ACOs being likely to sign a second contract and 92% either unlikely or undecided.

NAACOS President, Clif Gaus, commented "This continues to be the most troubling aspect of the Medicare Shared Savings Program and must be sufficiently addressed in the upcoming CMS proposed rules or the MSSP will no longer exist and the high hopes of DC policy-makers to migrate ACOs to capitation and two-sided risk will be impossible."

NAACOS continues to be concerned about the significant investment ACOs are making to sustain their operations. They define those management costs to include, administration, data, compliance, and care coordination costs among others that would not otherwise have been incurred. These did not include costs prior to the operation of their first or current performance year. ACO respondents reported an annual mean of $1.5 million management costs directly attributable to ACO operations. A previous survey included a higher percent of first year ACOs and that estimate was $2.0 million. When operating costs for the two and half years of the MSSP are totaled, Medicare ACOs have spent over $900 million for care coordination and other operational costs.

CMS Final ACO Quality Benchmarks

On October 31st, CMS finalized changes to the Medicare Shared Savings Program (MSSP) quality measures and benchmarks. While the National Association of ACOs is pleased CMS responded to several ACO provider concerns, the NAACOS believes that changing 25% of the measures is too disruptive and costly for the ACOs and do little to better inform the consumer. Further, while CMS will modestly take into account year-over-year increase in each quality measure, the quality measurement system in total will exclusively reduce the savings earned by the ACOs and provide no positive reward for improving the quality of healthcare to Medicare beneficiaries. Instead of a system of rewards and penalties, CMS has chosen to apply the "stick" only approach to ACOs. If the first year of ACO quality measures had counted in calculating Performance Year 1 savings, not one of the 52 ACOs earning shared savings would have retained all of their savings and the total savings going to the ACOs would have been reduced by 25%.  In sum, NAACOS believes CMS failed to strike an adequate balance between changes to the MSSP measure set itself and reforms the agency is making to performance benchmarking.

NAACOS President Clif Gaus said, "While CMS has made modest improvement to the ACO Quality Benchmarking, it is still a punitive program that will only lead to future reductions in savings paid to the ACOs who have worked hard to achieve those savings. Coupled with the many attribution and financial benchmarking defects, the Medicare Shared Savings Program is not sustainable in its current configuration and will decelerate the pathway to accountable care for Medicare Beneficiaries."

For additional information on the Survey results, please access the NAACOS Member Newsletter at

SOURCE: National Association of ACOs

Topics: ACO, MSSP, Accountable Care Organization, Medicare Shared Savings Program, ACO Models, Accountable Care Organizations, ACO Participation

CMS Launches New ACO Innovation Model Targeting Underserved Areas

Posted by Matthew Smith on Oct 17, 2014 2:16:00 PM

ACO, Accountable Care Organization, Health DirectionsThe Centers for Medicare & Medicaid Services (CMS) has launched a new accountable care organization (ACO) initiative that is designed to encourage new ACOs to form in rural and underserved areas, and current Medicare Shared Savings Program ACOs to transition to arrangements with greater financial risk.

The new initiative—the ACO Investment Model—will build on the experience with the Advance Payment Model and will provide up to $114 million in upfront investments to up to 75 ACOs across the country. The model was developed in response to stakeholder concerns and available research suggesting that some providers lack adequate access to the capital needed to invest in infrastructure necessary to successfully implement population care management. CMS says it will provide financial support to these ACOs to make infrastructure investments and develop new ways to improve care for Medicare beneficiaries. The agency adds that it will recover these payments through an offset of an ACO’s earned shared savings.

Participation in the ACO Innovation Model will be limited to two distinct groups:

  • New Shared Savings Program ACOs joining in 2016—The ACO Investment Model seeks to encourage uptake of coordinated, accountable care in rural geographies and areas where there has been little ACO activity, by offering pre-payment of shared savings in both upfront and ongoing per beneficiary per month payments.
  • ACOs that joined Shared Savings Program starting in 2012, 2013 and 2014—The ACO Investment Model will help ACOs succeed in the shared savings program and encourage progression to higher levels of financial risk, ultimately improving care for beneficiaries and generating Medicare savings.

MSSP ACOs that will begin particpating in 2015 will not be eligible for the Investment Model as they will have not had a year of reconciled financial and quality performance until after the second application period. CMS says it may consider funding for 2015 starters at a later date.

The application deadline for organizations that started in the Shared Savings Program in 2012 or 2013 will be December 1, 2014. Applications will be available in the summer of 2015 for ACOs that started in the Shared Savings Program in 2014 or will start in 2016.

During the selection process, the ACO Investment Model will target new ACOs serving rural areas and areas of low ACO penetration and existing ACOs committed to moving to higher risk tracks. CMS will also give preference to ACOs that provide high quality of care, ACOs that achieved their financial benchmark, ACOs that demonstrate exceptional financial need, and those that submit compelling proposals for how they will invest both their own funds and CMS funds.

MSSP, Medicare Shared Savings Program, ACO, Accountable Care

Topics: ACO, MSSP, Accountable Care Organization, Rural Health

Sixty-Four ACOs Save Enough Money To Earn Bonuses

Posted by Matthew Smith on Sep 30, 2014 12:32:00 PM
Courtesy of Kaiser Health News

ACO, Accountable Care OrganizationAbout a quarter of the 243 groups of hospitals and doctors that banded together as accountable care organizations under the Affordable Care Act saved Medicare enough money to earn bonuses, according to the Centers for Medicare & Medicaid Services announced.

Those 64 ACOs earned a combined $445 million in bonuses, the agency said. Medicare saved $372 million after accounting for the ACOs that did not show success, including four that overspent significantly and now owe the government money.

The bonuses, losses and Medicare savings are teensy sums in the context of a program that spends half a trillion dollars a year on care for the elderly and disabled. But the Obama administration views the results so far as evidence that reorganizing the financial incentives for doctors and hospitals — a key element of the health law – can translate to substantial savings if the program expands nationwide.

ACOS are voluntary affiliations in which doctors and hospitals join together to coordinate care with the lure of earning extra money if they save Medicare money while maintaining the health of their patients. The program aims to encourage doctors to focus on keeping patients healthy and to intervene quickly if they are struggling, rather than waiting until they need complex — and for doctors in the old pay model, lucrative — operations or other kinds of care.

There are now more than 360 Medicare ACOs caring for about 5.6 million elderly Americans, although some of these ACOs are new enough that Medicare is not assessing their performance.

There are two types of ACO programs for which Medicare reported results. Under the largest experiment, the Medicare Shared Savings Program, 53 ACOs saved enough money for Medicare in 2013 to earn a piece of that as a bonus. On the red side of the ledger, 41 ACOs spent more than Medicare estimated they would under normal conditions. Most of these ACOs are shielded from financial penalties, but one –Dean Clinic and St. Mary’s Hospital Accountable Care Organization in Wisconsin –will have to repay Medicare $4 million because it cost Medicare $10 million above expectations.

A list of bonuses for those ACOs is available here.

For the remainder of these ACOs, Medicare either did not have final results or found spending changes so small that they might be due to fluctuations in patients’ year-to-year needs. Those ACOs received neither bonuses nor penalties.

The second, smaller group of 23 ACOs are in the Pioneer ACO Model. They have more experience, and the financial incentives are larger. Out of this group, 11 earned bonuses, Medicare announced. Three other ACOs in this Pioneer ACO Model lost money, and three more took advantage of a Medicare option that allows them to delay evaluation until after they have three years of experience.

The Pioneer results covered the second year of that program, while the performances of the other ACOs were judged for a period between 12 and 21 months, depending on when the ACO launched. Medicare announced interim results in January.

Topics: ACO, Accountable Care Organization, CMS, Pioneer Accountable Care Organization

Four More Hospital Systems Exit Pioneer ACO Program

Posted by Matthew Smith on Sep 26, 2014 2:27:00 PM

Pioneer ACO, Accountable Care OrganizationThree years after the Centers For Medicare & Medicaid Services selected 32 groups to participate in the Pioneer Accountable Care Organization Model program, they are down to 19 players. Officials say that navigating the program's rules has proved challenging. The Franciscan Alliance, Genesys PHO and Renaissance Health Network have exited the program, which is now in its third year. In August, Sharp HealthCare, San Diego, announced its decision to pull out after determining “the model was financially detrimental” despite the ACO's performance managing quality and healthcare use.

Franciscan Alliance plans to join the Medicare Shared Savings Program, said Jennifer Westfall, Franciscan's regional vice president for Franciscan Alliance Accountable Care Organization. The ACO did not get to share any savings in the Pioneer program's second year and anticipates no bonus in the third year, which prompted the organization to leave. 

“Results from 2013, our second performance year (PY2) in the Pioneer ACO, are now available from CMS,” she said. “Overall, our Pioneer ACO received a quality score rating of 83.7%. While this is indicative of strong performance, we did not do as well in meeting our benchmark for reducing the costs of patient care.”

Michael James, president and chief executive of Genesys PHO, said the Pioneer's financial formula put the Michigan ACO at a disadvantage. The ACO faced a $2.5 million penalty in the first year and $1.9 million in the second year. Genesys PHO will also apply to the shared savings program, he said. 

Following are capsules from two other articles published this week by The Wall Street Journal and Modern Healthcare, respectively.

The Wall Street Journal: A Medicare Program Loses More Health-Care Providers
Four more hospital systems recently have dropped out of the Pioneer Accountable Care Organization program, a key part of the federal health law, leaving just 19 of the original 32 participants. Accountable care organizations seek to curb costs by better coordinating care. Hospitals and groups of doctors who keep costs down for large groups of Medicare patients get to share in those savings. But navigating the program's rules has proved challenging for some hospitals, even those long experienced in coordinated care (Beck, 9/25).

Modern Healthcare: Medicare’s Pioneer Program Down To 19 ACOs After Three More Exit
Three years after CMS carefully selected 32 accountable care organizations deemed best able to manage the Pioneer program's financial risks, three more decided they no longer want to. The new departures -- the program is now down to 19 ACOs -- suggest even the most sophisticated health systems may be unwilling to take losses as policymakers test new payment and delivery models. Franciscan Alliance in Indianapolis, Genesys PHO in Flint, Mich., and Renaissance Health Network in Wayne, Pa., have exited the program, which is now in its third year (Evans, 9/25).

Topics: ACO, Accountable Care Organization, Pioneer Accountable Care Organization

Ten Key Governance Best Practices for Your ACO or CI Program

Posted by Matthew Smith on Jul 21, 2014 12:48:00 PM
By Daniel J. Marino,
President/CEO, Health Directions

ACO, Clinical Integration, GovernanceA board’s most valuable resource is its time.”  That single sentence, from a renowned expert on board and governance matters, serves as the wellspring for some important guiding principles for governance of your accountable care organization (ACO) or clinical integration program.

Following are some best practices your organization can adopt to ensure optimal effectiveness of governance functions and your organization’s overall success in achieving its strategic objectives.


1. Screening Tool for Prospective Governance Members

Most population health management-type organizations are comprised of multiple stakeholder groups, some of whom have little history of working together or knowledge of the capabilities and potential conflicts of leadership. In some cases, these stakeholders have historically thought of themselves as competitors to one another. An important exercise for any board is to work through a process for objectively and consistently screening potential board members to ensure suitability. Such a screening process probably should involve some sort of screening for conflicts of interest, but at its simplest level should at least make sure the prospective governance member is available to attend governance meetings at scheduled times.

2. Position Descriptions for Board and Committee Chairpersons and Rank and File Members

Position descriptions are not just for management. A succinct statement of the purpose and expectations of both Board/Committee chairpersons as well as “rank-and-file” Board and Committee members can be remarkably helpful, particularly in underscoring the importance of leaving members’ legacy “stakeholder” organizational interests at the door and acting in the best interests of the enterprise. This is an important first step in building a common culture and preparing for the future, rather than preserving the past.

3. Cycled Performance Review of Board and Committee Chairs and Rank and File Members

Once formal position descriptions for Board/Committee chairpersons and rank-and-file members are developed and approved by the Board, it is easy to use these tools – specifically the duties – as the basis for formal performance evaluation and feedback. It is recommended that Board and Committee chairs be formally reviewed once a year, and that a cycled approach be used for rank-and-file Board/Committee members such that these members are reviewed at least once every two or three years. Performance feedback should be sought from fellow Board/Committee members. An objective third party might be engaged to consolidate (and de-identify) peer feedback, and then review results with the reviewee.

4. Formal Orientation for New Governance Members

It is important to have a steady rotation of new Board and Committee members to ensure all stakeholder represented in Board and committee decision-making, and in building a “bench” of physician leaders knowledgeable of and committed to the organization’s strategies. One effective means of doing this is to have formal orientation governance sessions with the incoming class of governance members. Depending upon the size of your governance, these orientation sessions might be conducted once or twice a year. They should be scheduled at times that are convenient for incoming governance members to attend (e.g. early morning or dinner meeting times). Attendance at an orientation could be a requirement before a candidate is officially seated on the Board or a Committee.

5. Governance Compensation

Some organizations routinely compensate physicians for their attendance and participation in committee work. Other organizations fiercely resist the practice. Regardless of whether you chose to compensate or not, the Board may wish to proactively evaluate the merits of, and formally adopt a policy related to, governance compensation, rather than just respond reactively when asked.

6. Charters & Annual Work Plans

It is typical for a Board, as one of its first orders of business, to develop a governance organization structure that creates a select few committees to do a “deeper dive” into policy matters and oversight activities. While each committee typically reports to the Board, there is often significant interaction among the committees as well. For these reasons, it behooves the Board to clearly articulate the role and expectations of its committees. This can take two forms: first, a “charter” outlining the general roles and responsibilities of each committee, and second, an annual “work plan” outlining what specific activities the committee is to undertake in a particular year. To illustrate, it would be typical for the “charter” of a quality committee to specify that committee as the governance entity in which program measures are to be developed. The “annual work plan” might include a directive from the Board that, this year, it expects the quality committee to develop measures related to cardiology, oncology and orthopedics. Committee charters should be reviewed and changes approved by the Board on annual basis, presumably at the same time that annual Committee work plan assignments are approved.

7. Board and Committee Self Review Process

Boards and committees are collections of individual members, but are also entities unto themselves. Just as individuals’ performance should be reviewed on a periodic basis, it is recommended that Boards and Committees do a collective self-review once a year, perhaps as part of an annual retreat process or in a special executive session.

8. Planning vs. Monitoring

As noted above, a board or committee’s most valuable resource is its time. The role of governance is to set strategy and the role of management is to implement strategy. It would be a revealing exercise to review the agendas of your board over the past year, identifying the proportion of meeting time and content spent on monitoring and looking over the shoulders of management vs. developing strategy and setting policy. How much time was spent looking forward vs. looking backwards at operations?  Ideally, at least 70 percent of Board time should be spent setting strategy, formulating goals and crafting policy. To expedite monitoring functions, it is suggested that the Board develop high-level dashboard reports on critical indicators and other management-by-exception practices.

9. Pro Forma Agenda and Annual Master Calendar of Agenda Items

To help ensure the Board spends adequate time on strategy while still attending to its duties to monitor operations, it can be instructive to develop an annual calendar of agenda items as a planning guide for board activities. This will help ensure that nothing “falls through the cracks” while balancing activities throughout the year.

10. Mix of Routine and Extended Meetings

At least once a year, the board should hold a meeting of extended length to review past year accomplishments conduct a self-review of governance effectiveness and update strategy to chart the way forward for the next year or planning cycle. This type of extended meeting, typically a board retreat, can be followed by a similar extended meeting of key committees – perhaps a month or two following the board retreat – at which committees can assimilate the strategy updates of the board and assess the impacts on committee activities.

Daniel J. Marino, CIN, Clinically Integrated Networks; As President/CEO of Health Directions, Daniel J. Marino shapes strategic initiatives for healthcare organizations and senior health care leaders in key areas such as population health management, clinical integration, physician alignment, and Health IT. With a broad background in all aspects of practice management and hospital/ physician alignment, Dan is nationally recognized as a strategic leader in Accountable Care Organizations and clinical integration development. He frequently speaks at national conferences and regularly authors articles for the nation’s top healthcare industry publications related to current transformations in healthcare delivery. Dan may be reached via email at or by phone at 312-396-5400.

Topics: Accountable Care, ACO, Accountable Care Organization, Clinical Integration, Clinically Integrated Network, Governance, Daniel J. Marino

CMS Proposes Changes For ACOs in 2015; Including Quality Benchmarks

Posted by Matthew Smith on Jul 7, 2014 11:56:00 AM

ACO, Accountable Care Organization, MSSP, Quality MeasuresA new CMS proposal would increase the number of quality measures that accountable care organizations (ACOs) would have to achieve under the Medicare Shared Savings Program (MSSP) in 2015. The changes, which are included in the Medicare physician fee schedule released Thursday, July 3, would introduce 4 additional quality performance benchmarks. ACOs receive bonus payments based on the number of quality targets they meet. The measures would place a greater emphasis on patient outcomes. If adopted in the final rule, the changes would go into effect January 1, 2015.

Specifically, the number of quality measures used to assess ACOs would increase from 33 to 37. ACOs would need to meet the quality performance goals to earn bonus payments under the program. The new measures would include:

  • Whether patients say providers informed them about treatment costs;
  • The rate of patients who are admitted to skilled nursing facilities within 30 days of being discharged from a hospital; and
  • Unplanned readmissions for patients with diabetes, heart failure or more than one chronic condition for any reason.

The proposal to reduce the reporting burden on ACOs and move toward electronic submission of measures is generally seen as a step in the right direction. CMS said it would continue to seek comments over the proposed changes. Officials seek input on future quality measures for care coordination, health outcomes, nursing home quality, prevention, elderly public health, and utilization.  

In addition, CMS proposed:

  • Replacing a measure dealing with medication management;
  • Changing a requirement that ACOs adopt electronic health records; and
  • Eliminating some measures dealing with treatments for coronary artery disease, diabetes and ischemic vascular disease.

According to Modern Healthcare, the changes would bring the measures in line with those used in clinical practices and help simplify reporting.

Also in the proposal, CMS suggested adding new quality incentives for ACOs. The incentives would:

  • Require ACOs to meet certain quality targets while reducing health care spending in order to receive bonus payments; and
  • Allow ACOs to receive awards based on annual quality improvement.

The number of ACO participants, which presently includes 350 organizations, is also expected to increase throughout next year.

MSSP, Medicare Shared Savings Program, ACO, Accountable Care 

Topics: Accountable Care, ACO, MSSP, Accountable Care Organization, Medicare Shared Savings Program

Infographic: The Game of ACO

Posted by Matthew Smith on May 30, 2014 9:48:00 AM

ACO, Accountable Care OrganizationCreated by the National Council for Behavioral Health, this fun infographic spells out the steps for becoming an Accountable Care Organization (ACO). While the intended audience is for behavioral health providers, this infographic serves as a great way to break down the process for any provider to be a part of an ACO. Through a four-step process, designed to look like Milton Bradley's "The Game of Life" game board, the infographic visually ties in the preparation, IT readiness, and implementation necessary for ACO participation.

To download a full-size image of this infographic, click here and right-click on the image to save to your device.

To view a larger version of this infographic on your screen, click here and then click the image again to expand.

Accountable Care Organizations, ACO, Infographic


MSSP, Medicare Shared Savings Program, ACO, Accountable Care

Topics: Accountable Care, ACO, MSSP, Accountable Care Organization, Behavioral Health, ACO Participation

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