As opportunities to provide palliative care through Accountable Care Organization (ACO) relationships continue to arise, operators will likely need to understand the varying types of reimbursement that exist in that arena.
ACOs are groups of physicians, hospitals and other health care providers who come together voluntarily to give coordinated high-quality care to their Medicare patients. Hospices and palliative care providers can collaborate with ACOs by becoming members of those organizations themselves, or by contracting with them through a preferred provider network.
Community-based palliative care’s track record of reducing costs and hospitalizations could make providers of those services attractive to ACOs, according to Edo Banach, partner at Manatt Health, a division of the law firm Manatt, Phelps & Phillips, LLP.
“You have this payment for value, not necessarily payment for bundles or episodes of care, but really the value,” Banach told Palliative Care News in a recent webinar. “There’s an incentive there for folks to provide valuable care, and a reward, in a sense, for investment in things that offset more expensive care — so investments, for example, to keep people in the community and keep people out of hospitals.”
Palliative care has such cost-savings potential. A 2016 study in the Journal of Palliative Medicine that showed organizations could save as much as $10,000 a month for patients who were getting in-home palliative care.
ACO arrangements often allow for the negotiation of mutually beneficial terms that are tailored to the needs and characteristics of patient populations. However, many types of ACOs exist and some offer greater opportunities than others.
On Jan. 1, 2023, Medicare launched a new type of ACO program called ACO Realizing Equity, Access and Community Health (ACO REACH), which is gaining a lot of interest.
The program, established last year, has generated in excess of $70 million in cost savings, according to the U.S. Centers for Medicare & Medicaid Services. The model contains a high-needs track to serve the sickest, most complex patients whom hospice and palliative care providers are well-positioned to serve.
Different ACOs can adopt varying methods of reimbursement for their members or contractors. One methodology is standardized per-member, per-month (PMPM) payments, according to Empath Health CEO Jonathan Fleece. However, these arrangements are often rare for palliative care providers.
“A per-member, per-month payment would put more risk on the ACO. That, frankly, is going to be a harder conversation until we’re able as end-of-life and palliative care organizations to prove the return on that investment,” Fleece told Palliative Care News during the webinar. “That’s not to say that more seasoned ACOs might not be willing to pay a PMPM, but I think it’s all going to depend on where that ACO is, and their understanding of the value proposition.”
A more common method of reimbursement within ACOs comes through the Medicare Shared Savings Program (MSSP), to which many accountable care organizations belong.
In this model, ACOs that generate cost savings for Medicare can receive a portion of that amount in return. A portion of these savings can then be passed on to a palliative care or other provider participating in or contracted with the ACO.
Some ACOs will also pay bonuses to providers who realize additional cost savings, such as for medications, durable medical equipment or ancillary services, Fleece indicated.
“The more that a contracted provider, or member also provider can get into that shared savings, the better. That’s the Holy Grail, if you will, of the economic model,” Fleece said. “The more confidence that an organization has that they can drive savings, and that is a data conversation first, to be able to really show how you can do that, that’s the biggest opportunity.”
