Primary Care Physicians and ACOs

ACO Series: Part 2

ACOs are groups of clinicians and organizations that band together to save Medicare money by keeping beneficiaries healthy. Click here for a basic overview of how ACOs work and how bonuses are paid.  Who better to monitor patients’ care and provide preventive medicine than a primary care physician? Primary care physicians and ACOs, with the right guidance, can get bonuses of $50-$100k each year in addition to your regular fee-for-service income. This is the program for you.

Before you sign up for your local hospital’s ACO, consider this…

Of the top 20 performing ACOs in 2017, only 30% were hospital-led. Hospitals with an integrated delivery network (a care continuum) have a vested interest in growing expenditures. ACOs typically provide bonuses equal to 50% of Medicare savings.  So if a hospital operates an ACO and reduces their Medicare revenue by 10%, they get a bonus of 5% for a net reduction in revenue of 5%.  Why would they do that?  If you are having trouble figuring out why they would be eager to do that, know that we can’t figure it out either; the incentive is nonexistent.

Thus, independent physician groups have stronger incentives as ACOs to limit utilization and pursue systemic strategies that affect their patients.

Hospitals’ finances suffer when they sacrifice fee-for-service revenue they earn from inpatient admissions, tests and surgeries. Hospitals operate on very thin profit margins and Medicare is typically the most significant payer in their payer mix.

Independent primary care physicians, on the other hand, receive no revenue from high-cost coronary bypass procedures, stents, or amputations of diabetic feet.  If the primary care physician, through attentive and proactive management, keeps the patient out of the hospital, there is no revenue loss.  In fact, based on experience from physician-led ACOs, this careful management requires more time, and their Medicare revenue can increase about 30%.  At the end of the year, a family doctor in a successful ACO can earn a bonus of an additional $50K to $100K, which is significant in comparison to the average family physician compensation of $219K (Medscape, 2018 Family Physician Compensation Report).

So, what?

ACOs are no longer a brand-new phenomenon.  Over 500 ACOs have been certified by Medicare and there are established best practices.  We encourage you to join a physician-led ACO or start your own. Be wary of hospital-led efforts, based on their poor track record over the last 5 years, but know that there are some exceptions.  If someone solicits your participation, inquire about their track record, experience, and the proposed profit sharing.  There are significant investments necessary for information systems and your practice will need help with changes.  To start your own, you will likely need a partner and/or consultant with prior expertise in operating an ACO.

Your office workflows will need to change in an ACO.  You will need to learn how to use new information systems that show you comprehensive information available to you for the first time as an ACO participant.   Instead of simply waiting for the phone to ring and treating the patients who show up, your practice must use this new information to identify who the sickest patients are, and you will need to get them into the office if they are not already coming.  You may need to learn some new skills to encourage and empower patients to make changes in their life, or at least to take their medicine!

If you do decide to join an ACO, become active in the governance, participate in creation of care paths for chronic conditions, and put the focus on your own profession: primary care.

In a successful ACO, your ACO will not only save the Medicare program some serious money, but you will get a share of it. When the ACO is successful, everyone wins: you, the beneficiary, and the economy.

In over 5 years of ACO experience, primary care is proven to be the number one most effective resource in curbing healthcare costs. However, this does not mean that there is not a place for specialists in an ACO. Find out more in Part 3!

Be sure to keep up with this 5-part series as we explore other FAQs about Accountable Care Organizations such as How Do I Start an ACO? Up Next: I’m a Specialist, Should I Join an ACO?


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