Bundled Payments, ACA, ACO

How ACOs and Episode Payment Models Can Work Together


ACOs and episode payment models can and do work together. To be most successful, payers need to synchronize the payment models they sponsor for participating providers. To help the Medicare program in this task, the Health Care Transformation Task Force released principles to consider when apportioning responsibility between alternative payment models covering the same patients.

The Task Force Principles view Accountable Care Organizations and Episode Payment Models as complementary, not mutually exclusive. Population health models can engage primary care physicians in disease prevention, selection of health care providers and site of care delivery. They can also remove incentives to overtreat. At the same time, episode payment models can engage facilities and practitioners in the management of expensive acute conditions.

To ensure that these model work together, the principles encourage Medicare to defer to model participants to craft “market-based solutions.” The Medicare program still defines the boundaries of the models and the scope of responsibility delegated to a particular type of facility or practitioner. The Task Force does not prescribe the nature of risk-sharing arrangements between ACOs and episode payment providers.

The principles assume the current Medicare definitions and responsibility for each type of model: hospital-based physicians and post-acute facilities accept responsibility for the ACO patient during an acute medical episode. This is a sound policy and should be retained. An ACO’s success – and, consequently, Medicare’s effectiveness as a value-based purchaser – depends on high-touch management of hospitalized patients. The current overlap policy encourages more investment of resources – by providers who specialize in the care and management of patients in hospital and post-hospital settings – for the care of patients at a time when they are most vulnerable.

The principles are therefore critical for advancing Medicare’s mission to reduce geographic variation in the quality and efficiency of care. There is not a single solution to the challenges of creating a more efficient and responsive healthcare system. Instead, Medicare should continue deploying concurrent, proven payment strategies. The argument about which payment model is “better” fails to recognize the lessons of history or the evidence of recent results.

Recognizing these lessons, the Task Force requests that Medicare defer to model participants to design risk-sharing arrangements reflecting local circumstances. Not all risk-based ACOs have developed skills for managing population risk. And many are not prepared to contract with downstream facilities and specialists. It will take time. Population health managers, when ready, can negotiate with acute care specialists participating in episode payment models. Meantime, market-based solutions embrace the spectrum of capabilities currently mastered by model participants – whether novice or veteran.

Remedy shares the Task Force’s belief that “policymakers should encourage solutions that allow the market to innovate and compete on delivering the best care for patients at the lowest cost whenever possible.” Local providers are in the best position to understand the capabilities and skills gaps that exist in a given market. The Principles avoid prescriptions that could stymie efforts by Medicare to advance clinical integration through risk-sharing arrangements between population health and episode payment models.

Tagged: Bundled Payments, ACA, ACO