Last week, the Centers for Medicare and Medicaid Services Administrator Seema Verma proposed bold changes to Medicare’s Accountable Care Organizations (ACOs), with the goal of accelerating America’s progress toward a value-based healthcare system—that is, one in which providers are paid for the quality and cost-effectiveness of care delivered, rather than volume delivered.

CMS has created a number of ACO programs over the last six years in an effort to improve care quality and reduce care costs across its Fee-for-Service Medicare population. In a Medicare ACO, hospital systems, physician practices and other voluntarily band together and assume responsibility for the quality and cost of care for beneficiaries assigned to them by Medicare. All ACOs meeting quality targets at the end of a given year receive a share of any savings generated relative to a predetermined cost benchmark; and depending on the type of ACO, some incur a financial penalty if they exceed the benchmark.

According to CMS’ recent analyses, ACOs that take on higher financial risk are more successful in improving quality and reducing costs over time. So one important objective of CMS’ proposed changes is to increase the rate at which ACOs assume financial risk for their beneficiaries’ care.

Another is to promote beneficiaries’ engagement in health improvement, which CMS proposes to do mainly through two program changes. The first would require ACO providers to disclose to beneficiaries in writing that they are participating in an ACO, and explain how this impacts care. The second change would allow qualifying ACOs to pay beneficiaries up to $20 for receiving qualifying primary care services. Looking through the lens of our innovation research and theories, these changes could be good for beneficiaries, and not just for the reasons CMS may think.

For instance, CMS views the disclosure of a provider’s ACO status and its implications to Medicare beneficiaries as a transparency benefit—a tactic for arming them with more information that they can use to shop around for providers and plans that suit them best, whether in- or outside their assigned ACO. But in explicitly bringing up the topics of care cost and quality, the disclosure gives providers the opportunity not only to educate beneficiaries on the ACO’s care model and objectives, but also to begin a conversation about what care “cost” and “quality” mean to them personally. As I’ve discussed before, understanding factors like these is an important step toward creating health solutions that people can fully embrace, given their unique values and circumstances.

And while payments to Medicare beneficiaries for receiving certain primary care services may indeed serve “as an incentive for taking steps to achieve and maintain good health,” as CMS hopes, in cases where beneficiaries’ motivation to do so already suffice, such payments could also reduce barriers they face in doing so.

To be clear, a few $20 payments in a year won’t help them overcome all barriers to better self-management. But they could defray gas or public transportation costs, child care expenses, health plan co-pays and other costs people often incur in obtaining primary care. And if combined with innovative providers’ increasing efforts to reduce others barriers people commonly face in managing their health, from social needs to competing priorities and more, such payments could be even more meaningful.

CMS’ proposed changes to Medicare ACO programs are welcome evidence of its ongoing commitment to value-based care, and acknowledgement of individuals’ significant potential to better manage their health and healthcare costs. If the proposed changes are approved, providers should take full advantage of the opportunities they afford to unleash this potential.

This post originally appeared in The Health Care Blog.


  • Rebecca Fogg
    Rebecca Fogg