Post‐Acute Care and ACOs — Who Will Be Accountable?

The Medicare accountable care organization (ACO) programs provide participating organizations with new incentives to lower spending while improving quality of care. These incentives apply to the care of long-term nursing home residents and patients of post-acute nursing facilities only if these groups are included in populations assigned to ACOs for performance evaluation. Thus, the potential for ACO programs to improve care and control spending for these costly Medicare beneficiaries depends in part on the rules governing beneficiary assignment. In the two principal Medicare ACO programs, the Shared Savings Program (SSP) and the Pioneer program, beneficiaries are assigned to participating ACOs if they receive more primary care services from ACO providers than from any other provider group. Assignments define the population for which an ACO is held accountable, but they do not restrict beneficiaries' choice of providers. For the purpose of assignment, both the SSP and Pioneer program define primary care as specific sets of evaluation and management (EM Department of Health and Human Services and Centers for Medicare and Medicaid Services 2011). Table 1 Evaluation and Management (E&M) Service Codes Used to Assign Medicare Beneficiaries to Shared Savings Program and Pioneer Accountable Care Organizations This definition ensures that long-term nursing home residents no longer receiving primary care in the community are still eligible for assignment to ACOs that include nursing homes. Bed-hold payments from Medicaid and lucrative post-acute reimbursements from Medicare have created perverse incentives for nursing homes to hospitalize long-term residents, contributing to high rates of potentially avoidable admissions in this population (Grabowski 2007; Grabowski, O'Malley, and Barhydt 2007; Ouslander and Berenson 2011). ACOs may view these hospitalizations as easy targets for cutting costs and seek to partner with nursing homes in shared savings contracts with Medicare. Although nursing facilities are currently included in very few of the 147 SSP and Pioneer ACO network descriptions, including nursing home EM Centers for Medicare and Medicaid Services 2012). For community-dwelling beneficiaries, however, counting EM Mor et al. 2010). Likewise, physician organizations and hospitals best able to manage these medically complex patients and coordinate their care across acute, post-acute, and outpatient settings may be denied the chance to share in greater savings. The assignment rules are used not only to determine populations for which ACOs are held accountable during performance years of a contract (when quality and spending are assessed relative to performance targets) but also to identify baseline populations whose costs of care in the years preceding the performance period can be extrapolated to establish spending targets. Thus, rules that limit assignment of especially costly beneficiaries to ACOs could lower spending targets significantly. Due to the differences between programs in the timing of assignment relative to performance assessment, the financial implications of these effects on spending targets may differ for SSP and Pioneer ACOs (Table 2). Table 2 Summary of Medicare ACO Program Rules for Beneficiary Assignment and Spending Target Calculations Using 2009 Medicare claims linked to the American Medical Association (AMA) Group Practice File, we quantified the potential assignment problem for community-dwelling beneficiaries caused by the consideration of post-acute E&M services as primary care and discuss its implications for the two Medicare ACO programs.