ASCs and ACOs: How Do They Fit?

John Seitz, CEO of MMX Healthcare discussed the relationship between accountable care organizations and ambulatory surgery centers at the Becker's 20th Annual Ambulatory Surgery Centers Conference, held Oct. 24-26 in Chicago.

Mr. Seitz's presentation was entitled "ACO: Recognizing the Opportunity for Your Surgical Center."

"ACOs are a fast-growing reality," said Mr. Seitz. "They may be here to stay."

He began by defining the ACO: an organization that enrolls patients and contracts with providers to deliver high-quality, coordinated services either commercially or through Medicare. If providers reduce costs and/or improve specified quality metrics in a certain timeframe, they are able to receive financial rewards from or share in the savings with Medicare or a commercial payer.

In the hospital context, ACOs encourage physicians and hospitals to cooperate in care coordination by holding them jointly responsible for care quality and cost. ACO arrangements can also involve risk, in which the provider would have to pay back a portion or all of the costs that exceeded the payer's established benchmark.

ACOs can bring together any number of unrelated entities in an attempt to leverage the benefits provided by an integrated delivery system, while avoiding restrictions imposed by common physical facilities or ownership. Mr. Seitz noted ACOs seem to borrow significantly from the concepts of clinically integrated networks and health maintenance organizations in this way.

The "shared savings" approach is designed to motivate ACO participants to coordinate care and lower costs, reversing the system of incentives so it is most beneficial to cut unnecessary procedures altogether. Reducing unnecessary care is the only way for savings to emerge from the process, which providers can then share.

While the Medicare ACOs were intended to be pilot programs, Mr. Seitz said the ACO has captured the attention of commercial payers. "Rather than waiting for results of CMS pilots, they are partnering with physician groups and hospitals to launch ACOs that cover their members," he said.

For ASCs, Mr. Seitz described two ACO scenarios. 

The first is general, in which an ASC joins an integrated network that is participating in an ACO in a geographically similar location. The ASC does internal negotiations with the ACO for shared savings rates. While this system comes with benefits — knowing all players, easier system integration and an understanding of the local market — it also has drawbacks. ASCs may have suboptimal leverage when negotatiating shared savings rates, compared to other providers in the ACO, and market revenue may be limited.

The second type is more specific. This involves a group of independent ASCs forming an ACO to cover a broad geographic territory, bidding on all ACO contracts within that territory. This gives ASCs great leverage in their markets and the possibility of higher reimbursements. ASCs should be wary of the incremental complexity in building an organization of such a wide range.

Mr. Seitz said hospitals, more often than not, drive ACOs in ASCs' local markets. He shared four hurdles for ASCs to keep in mind if they decide to contract with ACOs.

1) Consider legal structure. A surgery center conforms to one legal structure, while an ACO may conform to another legal structure altogether. Consider how joining the ACO may affect the ASC's compliance.

2) ACOs have common leadership. That common ACO governance structure is a board that holds the decision-making authority for the entire organization. Make sure the ASC has a voice within the board of directors or other governing body.

3) ACOs must exchange information. Common information systems require a shared health information exchange platform. Consider how the ASC plans to leverage existing information systems to exchange data across locations. 

4) Quality reporting is non-negotiable. While ASCs already have certain reporting requirements to Medicare, ACOs have an extensively defined process for reporting the costs and outcomes of care. ACOs will require any prospective ASC member to report this information. 

Of ACOs Mr. Seitz added this: "They could capture significant portion of healthcare dollar. ASCs should recognize this opportunity and evaluate the gain of participation in either type of network."  

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