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Washington Highlights

MedPAC Discusses ACOs and Payment Bundling

April 5, 2013—The Medicare Payment Advisory Commission (MedPAC) April 4 discussed accountable care organizations (ACOs) and bundled payments in its monthly public meeting.  MedPAC staff presented an update on the Medicare ACO programs: the Pioneer ACO and the Medicare Shared Savings Program (MSSP).  Staff presented on bundling post-acute care services, and the commission discussed potential bundled payment policy options.

The staff presentation on ACOs updated the commissioners on the number and location of Pioneer and MSSP ACOs, and highlighted their common features and differences in payment.  The presentation also compared ACOs’ and Medicare Advantage (MA) plans’ comparative market advantage and strengths and weaknesses.  MedPAC staff research has found that ACOs are concentrated in markets with higher potential for managed care gains.

The commissioners’ discussion of ACOs focused on the need to examine three areas: communication of ACOs to beneficiaries and subsequent beneficiary involvement; lack of assignment to ACOs by non-physician providers; and thinking through the implications for ACOs at the end of the three-year agreements.  Some key points included:

  • The way ACOs and ACO data-sharing are communicated to beneficiaries is important to the success of the program;
  • The commission should examine access issues and continue to advance the idea of assigning beneficiaries based on primary care visits to non-physician providers; and
  • ACOs present a unique opportunity and it is critical to assess and learn from ACO performance.

The commission’s discussion of bundling post-acute services is a continuation of conversations that occurred at the September 2012 meeting [see Washington Highlights, Sept. 14, 2012].  The commission is not yet at the stage of making recommendations, but rather thinking through a variety of policy options.  MedPAC staff presented principles for benchmark setting, and an illustration of a bundling program that uses withholds for providers that can be earned back by meeting expenditure benchmarks.

MedPAC Chair Glenn Hackbarth, J.D., framed the discussion by asking commissioners to consider how the outlined plan of bundling for post-acute services fits into the payment and delivery reforms already underway, including ACOs, the readmissions reduction program, and the ongoing CMS bundling demonstration, the Bundled Payments for Care Improvement initiative (BPCI).

Commissioners are supportive of the concept of bundling, but generally felt they need more information to make judgments of the relative merits of various programs.  Much discussion centered on the relationship between payment bundling and the readmissions reduction program, and future considerations for the overlap between these two. 

Other topics covered included: competitively determined plan contributions for low-income beneficiaries; preparing private plans to better serve dual-eligibles; hospice policy issues; improving Medicare payment for chronically ill patients in hospital settings; and coverage of services provided by advanced-practice nurses and physician assistants. 

The meeting presentations and transcript can be found on MedPAC’s website


Jane Eilbacher
Policy and Regulatory Specialist
Telephone: 202-828-0896


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Washington Highlights, a weekly electronic newsletter, features brief updates on the latest legislative and regulatory activities affecting medical schools and teaching hospitals.

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