01 July 2016

About 75% of accountable care organizations are not producing a margin sufficient to repay participating providers, Kurt Salmon’s Jim Giordano, leader of the firm’s population health and value-based care initiatives, tells HealthPayerIntelligence. As ACOs become a mainstay of the health care industry, the Centers for Medicare & Medicaid Services (CMS) will need to consider revisions to the ACO program to achieve its original intent as a tool for the transition to value-based care.

CMS should consider supporting and addressing the fact that early iterations of ACOs must both invest funds into creating a value-based care platform as well as manage the revenue cycle of the operation, Giordano says.

Some Medicare Shared Savings Program ACOs have managed to leverage the program to build a diverse network of providers and develop value-based care tools and protocols, he added. “Often, leveraging that narrow network that has developed around an MSSP ACO into other products, whether commercial or Medicare Advantage, is the logical progression of the journey,” he said.

“I’m pretty optimistic about Next Generation ACOs,” he added, referring to the newly introduce ACO model that incorporates some of these support mechanisms. “I believe that those enterprises that have been granted access to the next-generation product generally have the infrastructure and the experience to take on additional risk. This is an opportunity because there’s an improvement in terms of the economic potential of engaging your network in this transition process.”

To read more of Jim Giordano’s thoughts around ACOs, visit: Accountable Care Organizations Rely on Population Health Data