Mr. Hayek differentiated between Medicare ACOs and commercial ACOs. Medicare ACOs are based on CMS’ Physician Group Practice Demonstrations that occurred from 2005-2009. Of the ten organizations that participated, only 50 percent achieved cost savings. In fact, after the rules for ACOs were release, these organizations wrote a letter to CMS arguing against the model. ACOs would include a base of at least 5,000 patients, primary care physicians that are exclusive to one ACO, retrospective assignment of patients to an ACO based on claims data, an open network, 65 quality measures, a required 2 percent threshold to trigger shared savings and a downside risk by year three.
The downside risk is that the ACO would be financially penalized if it did not meet the 2 percent threshold after three years. In contrast, commercial ACOs are structured individually with the payor and do not include a downside risk.
Mr. Hayek suggested the Medicare ACO model needs to be restructured. He said one challenge of an ACO is rebasing. If an organization decreases costs by 2 percent by year three, the benchmark for costs may get rebased, which would eventually be impossible to reduce by 2 percent. However, he said one opportunity for ambulatory surgery centers is the possibility that hospitals in ACOs may shift low-margin surgeries to an ASC, which could create a 45 percent savings on each case and increase quality.
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