Medicare might want to create a supplemental coverage plan that encourages patients to seek care in a single accountable care organization (ACO), the Medicare Payment Advisory Commission (MedPAC) was told Thursday.

A “Medicare Select ACO supplemental plan” would provide lower cost-sharing for patients in an ACO in an attempt to increase loyalty to that ACO’s providers, MedPAC staff told commissioners.

A common complaint about ACOs has been that patients are free to receive care from any provider they like and not stay within that ACO, even though ACO providers remain financially responsible for that patient.

ACOs pool provider resources and become accountable for the cost and quality of care for a group of patients — Medicare beneficiaries in this case. They can share with Medicare in savings they generate if they hit certain benchmarks.

While ACOs intend to better coordinate patients’ care, if patients seek treatments outside that group of providers, it could lessen the chance to reduce the cost of patients’ care and thwart ACOs’ shared-savings aspect.

MedPAC Commissioner Herb Kuhn, chief executive of the Missouri Hospital Association, said Medicare beneficiaries need greater incentives to help current and potential ACOs better control their respective markets.

The provider expectation in an ACO is more like that of a managed-care plan, in which providers are largely responsible for their patients’ outcomes, Craig Samitt, MD, chief executive of Dean Health System in Madison, Wis., said Thursday. Meanwhile, the patient experience is more like traditional fee-for-service, in that they can go where they choose and seek as many services as they like.

“It creates a significant imbalance where the providers need to make a large investment, but it’s very hard to bend the curve and influence either quality or costs because of historical expectations in the fee-for-service population,” Samitt said.

Other commissioners questioned Thursday if this lower cost-sharing in an ACO supplemental plan would only go toward primary care providers or only to specialists, but MedPAC Chairman Glenn Hackbarth, JD, noted this is the first of a round of discussions on recommended changes to ACOs.

The first of the 3-year Medicare Shared Savings ACO contracts still start to expire in 2015, and MedPAC — an independent congressional advisory agency on Medicare issues — can weigh in on where the next phase of Medicare ACOs can go.

For example, Hackbarth said MedPAC needs to take a stand on whether Medicare should continue to offer risk-free contracts to providers — a staple of the initial 3-year contracts of Medicare Shared Savings ACOs — or begin to make providers eligible for penalties in an ACO’s next round of contracts if they fail to meet savings targets.

CMS has yet to publicly state its position on this policy, but it will likely be included in proposed ACO rules next year, MedPAC staff said Thursday.

MedPAC commissioners expressed a desire to make ACOs a more attractive option for more providers. Samitt, who runs a Medicare Shared Savings ACO at the Dean Clinic, noted a number of issues that could be addressed in ACOs, including patients’ ability to receive care outside that ACO. Also it can be costly to provide patient education programs if savings aren’t achieved, and if patients don’t follow those educational guidelines.

Some of those issues forced nine of Medicare’s 32 Pioneer ACOs — Medicare’s leading organizations — to drop out of the program earlier this year. Pioneers reported savings of less than 1%, MedPAC staff said Thursday, while it cost them between 1% and 2% to run an ACO.

MedPAC staff also suggested creating uniform quality benchmarks, which currently differ between Medicare fee-for-service, Medicare Advantage, and ACO providers.

Also, MedPAC questioned if ACO’s spending benchmarks need to be compared against local fee-for-service spending — much like Medicare Advantage plans — rather than an organization’s historical spending.

Almost 250 Medicare-driven ACOs currently exist and serve nearly 4 million beneficiaries, or 10% of the Medicare population.

MedPAC’s next scheduled meeting is Oct. 10 to 11.

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