ACO Considerations

An Accountable Care Organization (ACO) can be comprised of any number of acute and post-acute providers, including physicians, hospitals, home health agencies, DMEs, etc., (called “participants”) who come together voluntarily to give coordinated care to at least 5,000 Medicare patients. The goal of coordinated care is to ensure that health-care providers work together to make sure patients get the right care at the right time, while avoiding unnecessary duplication of services and preventing medical errors. ACOs are only one way of facilitating coordinated care for Medicare patients.

Why HME/DME Companies Should Join an ACO

Medicare providers billing for primary care services are the basis for assigning patients to an ACO. A beneficiary who receives at least one primary care service from a primary care physician that is paid for by Medicare during the measurement period will be assigned to an ACO. This is relevant to DMEs in the following way: assume DME Company A receives a majority of its referrals from 10 physicians. If those 10 physicians join ACO No. 1, it is highly likely that all 10 of the physicians’ Medicare patient DME referrals will be sent to one or more DME companies that are part of ACO No. 1. If DME Company A is not part of ACO No. 1, it will probably lose out on all of these physicians’ Medicare patient DME referrals.

Furthermore, for purposes of convenience, the 10 physicians will presumably refer all their private insurance patients to the same one or more DME companies that are part of ACO No. 1. Consequently, DME Company A may lose a majority of its current and potential referrals if it does not join ACO No. 1.

Even if DME Company A joins ACO No. 1, it may still lose out on significant referrals if one or more of the referring physicians do not join ACO No. 1. For example, if three referring physicians join ACO No. 1, two physicians join ACO No. 2 and five physicians join ACO No. 3, then unless DME Company A joins all three ACOs, it may lose out on a number of DME referrals.

Practical Considerations

Below are some practical considerations for DMEs considering joining one or more ACOs:

• Given that an ACO can range in size from 5,000 to more than 100,000 Medicare patients (not to mention private insurance patients), any DME company that wants to join an ACO must be able to provide DME to a large number of patients. An ACO will not want to contract with a DME company that cannot provide care to a certain percentage of the ACO patient population. Therefore, smaller and medium-sized DMEs should consider forming a network that may be able to provide care to such a large population of patients before contacting an ACO.
• In order to provide seamless coordination of care, all providers in an ACO must be able to access information about patients quickly. This is primarily achieved through the use of an electronic health record (EHR). Few, if any, ACO participants do not have patient information available in an EHR format. Consequently, DMEs that do not currently use EHR for storage of patient information should consider implementing an EHR system, or determine the degree of difficulty and cost it will take to transform patient information to an EHR system when negotiating with an ACO.
• While most providers are aware that ACOs have a component of shared savings and/or risk, the issue is rarely raised in preliminary negotiations. It is imperative that DMEs consider how savings and/or risk will be shared among the various ACO participants. Will all providers receive an equal portion of the shared savings, or will certain providers receive a larger share? Furthermore, will all providers have to pay the same percentage of costs towards ACO operations, or will each ACO participant pay a different amount?
• Always remember that even if an ACO is already in existence, do not assume that the ACO has contracted with one or more DME companies. Most ACOs are initially formed without contracting with any post-acute care providers.