How Medicare ACOs Are Transforming Health Care

“You know, my dog, Maggie, gets a reminder from the vet when she needs her rabies shot. My car gets a reminder from the Ford dealer when it needs an oil change,” says Bob Rauner, M.D., chief medical officer for the OneHealth Nebraska ACO. “But doctors’ offices weren’t very good at doing that. But now they are because they know that if they don’t have good vaccination rates or good cancer screening rates, they are going to get dinged.” Rauner’s ACO includes 23 primary care practices in Lincoln and the surrounding areas. His wife, Lisa, is also a family physician. She belongs to another ACO.

“Her relationship with her patients is still the same, but Lisa has more resources now,” Rauner says of his wife. “So if she has a patient who’s on 12 medicines and who’s confused about their medicines, she’s got a pharmacist that can meet with them. If she has someone who is having a hard time figuring out how to get on food stamps or is having trouble paying their rent, she has a social worker that can help them figure things like that out.”

ACO providers are rewarded financially for keeping costs down and are penalized financially if health care costs for their patients total more than what was targeted. Basically, Medicare and the ACO provider split the savings. But there’s a catch: The ACOs not only have to show that they’ve saved money, but the data also must show that they have improved the health care of their patients.

The quality measures ACOs are rated on include such factors as whether their physicians have screened patients for breast cancer and colorectal cancer, whether their patients have gotten their flu shots, whether they’ve screened their Medicare enrollees for the risk of falling and for depression, and whether they’ve prevented their patients from being readmitted to the hospital after an illness. The metrics also include a section on patient satisfaction, measuring issues such as how well the providers communicate with their patients, whether patients can get timely appointments and have easy access to specialists, and if the office staff is courteous and helpful.

In 2021, Rauner’s ACO scored at or above the national average in most of these categories and, according to Medicare, it saved more than $6 million. Rauner says the ACO put back most of its $3 million in extra profits into the clinics so they could hire more care coordinators and bolster other services. The OneHealth ACO got the top overall quality rating score of 100. Its 95.3 rating for communicating with its patients was a tick above the 94.6 percent national average. Its 90.6 percent rating for screening for depression and creating follow-up plans was below the national average of 96.7.

While Meyer’s and Rauner’s respective ACOs involve just primary care physicians, other ACOs also include specialists, and some have hospitals as part of their groups. 

Some ACOs have taken advantage of the ability to waive a Medicare requirement that someone admitted to a hospital needs to spend three nights there before Medicare will pay for them to be transferred and get care at a nursing home or rehab facility. That’s because one of the hallmarks of ACOs, Seshamani says, is that they focus on planning for a patient’s needs once they leave the hospital, as well as on following the progress of those patients.

Choice of doctors preserved

What patients need to know, experts agree, is that when their care is delivered by a provider who is part of an ACO, this doesn’t mean they will lose what has attracted many Medicare beneficiaries to original Medicare: free choice of medical providers. 

A main difference between original Medicare and Medicare Advantage (MA) plans is that under original Medicare, enrollees can go to any provider that accepts Medicare, while MA plans, the private insurance alternative to original Medicare, have networks of doctors and other medical providers. Beneficiaries enrolled in an MA plan who go to an out-of-network doctor may find they aren’t covered for that care or must pay more out of pocket.

“In Medicare, an ACO does not limit an individual’s choice of health care providers,” says CMS’s Seshamani. “If their doctor or other provider is part of an ACO, they still have the right to visit any doctor, hospital or provider that accepts Medicare at any time, even those who are not part of the ACO.”

Rob Fields, M.D., chief clinical officer for Beth Israel Lahey Health in Boston, says the issue of referrals to specialists highlights a key difference between original Medicare and MA plans, a difference that doesn’t change because someone is in an ACO. “What an ACO does not do is block care by the typical mechanisms that a Medicare Advantage plan might use, like prior authorization or any sort of review by an insurance company,” says Fields, who is a former chair of the board of the National Association of ACOs. Prior authorization is an insurance plan requirement that the plan must approve a particular test or procedure before it will agree to pay for such care.

In his experience, Fields says, patients often do not select specialists based on a thorough review of the quality of their work. They often base their decision on where the specialist’s office is, advice from a family member or friend, or the “brand” of the provider, such as the reputation of places like Memorial Sloan Kettering for cancer care or the Hospital for Special Surgery for orthopedic procedures.

Rauner, from the Nebraska ACO, says primary doctors, such as those in these ACOs, are best equipped to advise their patients on which specialists or hospitals to go to because they know the quality of these providers’ work and also know what their patients need.

So, Rauner says, if you are in an ACO, “it’s your doctor making the decision with you and not some random insurance plan person making that decision. The insurance plan person doesn’t the know doctors in Lincoln like I do.” His mantra: “I’m going to send you to the same place I’d send my mom or my kid.” 

Do patients know they’re in an ACO?

Physicians and other health care experts readily acknowledge that many Medicare enrollees whose providers belong to an ACO probably don’t know it. 

Cutillo recognizes that Meyer’s practice has gotten larger, and she is thankful for the BAT phone. But she didn’t realize these extra services were because her doctor was affiliated with an ACO. This despite there being notices posted in the office about the practice’s participation in an ACO and the fact that Meyer sends out a letter with this info to her patients a couple of times a year.

Cutillo, shows how she stores Meyer’s BAT phone number in her contacts at her home in Downingtown, Pennsylvania

Rachel Wisniewski

Tracy Nuckolls knows that his primary doctor is in an ACO. But that’s because before the 75-year-old retired, he was the chief legal officer for a large hospital in Tucson, Arizona. He still teaches health law courses at the University of Arizona College of Law.

Nuckolls had been a patient with a group of doctors for decades before they formed the Abacus Health ACO. What he’s noticed most about how his care is different is the follow-up the practice does after a medical issue. Nuckolls developed a difficult case of COVID during the pandemic. After spending several days in the hospital, he went to a rehab facility where he had to learn to walk again. He was also on oxygen for several months. 

“The interesting thing was that when I went home from the rehab hospital, I had a call from the transition team of the ACO within a day, making sure that my home care was coordinated,” Nuckolls says. It struck him that before the enhancements that have accompanied the ACO, “my wife would have been calling all over to get the fragmented portions of health care coordinated.” 

Nuckolls, who serves as the patient representative on Abacus’ board, says he’s not so sure it matters whether Medicare patients assigned to ACOs know the ins and outs of this new system. “Maybe it’s good that patients don’t know all the complexities of it,” Nuckolls says. “What matters is that they have all these extra resources available to them. They can take advantage of these resources.” It’s more important, Nuckolls adds, that patients get their care better coordinated and improved.

Editor's note: This story has been updated to reflect latest enrollment information