High Performance Accountable Care: Building on Success and Learning from Experience

April 14, 2011

Authors: Stuart Guterman, Stephen C. Schoenbaum, M.D., M.P.H., Karen Davis, Ph.D., Cathy Schoen, M.S., Anne-Marie J. Audet, M.D., M.Sc., Kristof Stremikis, M.P.P., and Mark A. Zezza, Ph.D.
Contact: Stuart Guterman, Vice President, Payment and System Reform, The Commonwealth Fund sxg@cmwf.org
Editor: Sarah Klein

Policy Recommendations

The Affordable Care Act builds on innovations already under way across the country and contains a number of requirements for extending successful ACO payment concepts to qualifying organizations. CMS can further support the success and spread of highperforming ACOs through its regulations and practices. The objective is to achieve a high performance health system that is organized to attain better health, better care, and lower costs. To facilitate this process, the Commission makes the following recommendations (Exhibit ES-1):

1. Strong Primary Care Foundation Commision Reccomendations

1a. CMS should ensure that all ACOs have a strong primary care foundation that builds on the concept of the patient-centered medical home.

1b. Although CMS may require that ACOs have certain structural characteristics (e.g., electronic medical records and availability of after-hours care) or have certain processes in place (e.g., quality improvement programs), the availability and accessibility to patients of a regular source of care and the ability of that provider to coordinate care received from all sources should be paramount.

2. Accountability for Quality of Care, Patient Care Experiences, Population Outcomes, and Total Costs

2a. All participating ACOs should be required to agree to and be able to report measures of quality of care, patient care experiences, and outcomes, or have arrangements in place to enable such reporting.

2b. Shared savings should be distributed contingent on high quality and positive patient experiences.

2c. CMS (along with other participating payers) should work with each ACO to ensure that incentives for providers within the ACO are aligned and consistent with the aims of better health, better care, and lower costs.

2d. Regardless of which payers are involved in the ACO payment mechanism, the shared savings paid out by each payer or group of payers should, to the extent feasible, take into account the ability of the ACO to achieve overall savings on total costs, rather than just savings for individual payers.

3. Informed and Engaged Patients

3a. Providers should notify all of their patients that the providers belong to a given ACO, along with its characteristics and what that will mean for the care that patients will receive.

3b. ACOs should encourage providers and patients to specify expectations and responsibilities, and engage providers and patients as partners in ensuring the best care and outcomes.

3c. CMS should test different approaches for encouraging patients to designate an ACO as the principal source of their care by providing positive incentives to do so (such as enhanced benefits or lower cost-sharing responsibility). Patients should retain the right to seek care from the providers of their choice, including those not participating in the ACO, unless they explicitly agree to receive care exclusively from the ACO’s providers.

4. Commitment to Serving the Community

CMS should make an explicit commitment to serving its community, including lowincome and uninsured patients, an integral part of qualifying as an ACO.

5. Criteria for Entry and Continued Participation That Emphasize Accountability and Performance

Entry criteria for ACOs should include, at a minimum, the availability of primary care and the capacity of the organization to ensure that patients have access to needed services across the continuum of care, as well as the ability to provide meaningful evidence of quality (including patient experiences and outcomes) and cost performance. Continued participation and financial rewards should be contingent on performance and accountability rather than structural characteristics. This should include public reporting of performance metrics.

6. Multipayer Alignment to Provide Appropriate and Consistent Incentives

CMS should actively work with providers and payers in each major market to develop multipayer ACO arrangements—including Medicare, Medicaid, and private payers—whenever possible. Such arrangements should be designed to align incentives among payers, give a clear and consistent message to ACOs, and enable them to focus on achieving higher quality of care, better patient care experiences, improved population health outcomes, and lower costs for all their patients, as well as simplifying administrative processes.

7. Payment That Reinforces and Rewards High Performance

7a. The threshold for attributing savings to ACOs should be set to reflect the predictability and reliability of each organization’s cost trend, to protect against shared-savings payments that are generated by random fluctuations in year-toyear costs, while ensuring that organizations are rewarded for achieving actual cost reductions.

7b. The determination and payment of shared savings should be accomplished so that the reward for reducing costs while improving quality is received with as little delay as possible from the behavior that generates it. This can be supported by prospectively determining the patients whose costs are to be used to calculate shared savings and prospectively setting the spending target for each ACO.

7c. CMS (along with other participating payers) should make upfront support, possibly as low-cost loans against future shared savings, available to organizations that, because of certain circumstances, need it to offset the infrastructure investment expense required to redesign care processes and make other changes so they can become successful ACOs. Determination of the availability and extent of upfront support and the basis on which it is provided (e.g., loans vs. grants) may differ by whether it is a safety-net institution serving underserved populations, as well as by other defining characteristics of the organization, subject to the organization’s potential for achieving the program’s goals and its proposed plan for doing so.

8. Innovative Payment Methods and Organizational Models

CMS should be prepared to apply different payment approaches that are suitable for different organizational configurations of ACOs in different geographic areas and different circumstances, as appropriate. These payment approaches could include primary care medical home fees or bundled acute case rates, along with shared savings, or risk-adjusted global fees with risk mitigation (e.g., stop-loss or reinsurance). All approaches should make payments contingent on reaching quality benchmarks.

9. Balanced Physician Compensation Incentives

For ACOs receiving payment for direct care as well as shared savings, compensation of clinicians within the ACO should include incentives to deliver evidence-based care but ensure that appropriate care is not withheld.

10. Timely Monitoring, Data Feedback, and Technical Support for Improvement

10a. CMS should provide baseline data as well as early and regular reports on total Medicare payments, utilization, and quality measures for the ACO patient population, and other data required to help ACOs be successful in achieving the aims of better health, better care, and lower costs; other payers should do the same. Trends should be tracked over time to assess the impact of alternative payment models and different configurations of ACOs and disseminate learning about the most effective strategies.

10b. CMS should work with other payers to develop robust information exchanges and standardized reports that can provide ACOs with timely feedback on comparative results, support rapid-cycle improvements in quality and cost performance, and develop new knowledge on effective and efficient clinical practices.

10c. The Department of Health and Human Services, through its Office of the National Coordinator for Health Information Technology, should provide technical assistance for implementing electronic information systems and exchanges to facilitate transfer of critical clinical information.

10d. CMS should create toolkits of interventions and practices that health care organizations have found effective in improving quality and lowering costs. All payers should collaborate to provide technical assistance to organizations to help them identify and adopt effective and efficient practices and to spread successful innovations in payment methods and organizational models.

10e. Every effort should be made by public and private payers, as well as providers, to ensure transparency of information and to minimize administrative complexity.


To meet population health needs now and in the future, the U.S. health care delivery system has to become accountable for three things: delivering high-quality, effective, and safe care that contributes to the best possible population health outcomes; configuring itself for the benefit of patients to provide excellent patient experiences with care; and using resources efficiently and prudently. Substantial evidence exists that it is possible to improve the way health care is organized and delivered to slow the growth of health care costs while improving outcomes and patient experiences. By adopting these objectives as core values and achieving increasingly stringent goals in each area, it will be possible to provide affordable health care into the future with access for all and care that helps to prevent illness, restore health for those with acute conditions, and maintain health and productivity for all, including the growing population of patients with one or more chronic conditions.

Holding the health care system accountable through new payment arrangements that support high value rather than high-volume care creates the promise of transforming the U.S. health system to achieve these aims. Yet, much work needs to be done to establish and spread ACOs and learn from innovative care systems. Success requires the development of trust among all the parties, as well as a willingness to test multiple approaches, measure results, and adapt rapidly to improve performance. Government leadership and flexibility are essential, as are activated and engaged clinicians and patients who embrace accountability for better care and health outcomes. If all this occurs, moving ACOs from concept to action can play an instrumental role in achieving a high performance U.S. health system over the coming decade.


S. Guterman, S. C. Schoenbaum, K. Davis, C. Schoen, A.-M. J. Audet, K. Stremikis, and M. A. Zezza, High Performance Accountable Care: Building on Success and Learning from Experience, The Commonwealth Fund, April 2011.