Health system leaders either running an ACO or looking to operate one should prepare for the potential financial losses that could come with functioning as a CMS-approved ACO, according to a report in The American Medical News.
The recently announced Medicare ACOs participating in the Shared Savings Program are split into two tracks. Track 1 ACOs will receive a smaller percentage of a shared savings cut with CMS, 50 percent, but will not be penalized if their patient care cost CMS more money than intended. Track 2 ACOs are potentially better suited for larger health systems able to manage financial risk. They can keep up to 60 percent of savings if quality metrics are met, but will need to repay CMS if patient care expenses increase by more than 2 percent.
ACOs can set aside cash reserves, establish a line of credit, withhold money from future CMS payments or purchase reinsurance to prepare for financial losses. Small ACOs may find reinsurance a better option because they have less capital to lean on than larger organizations.
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The recently announced Medicare ACOs participating in the Shared Savings Program are split into two tracks. Track 1 ACOs will receive a smaller percentage of a shared savings cut with CMS, 50 percent, but will not be penalized if their patient care cost CMS more money than intended. Track 2 ACOs are potentially better suited for larger health systems able to manage financial risk. They can keep up to 60 percent of savings if quality metrics are met, but will need to repay CMS if patient care expenses increase by more than 2 percent.
ACOs can set aside cash reserves, establish a line of credit, withhold money from future CMS payments or purchase reinsurance to prepare for financial losses. Small ACOs may find reinsurance a better option because they have less capital to lean on than larger organizations.
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