Key Strategies for Successful Physician Participation – Part II

Accountable Care Organizations and certain key strategies for successful physician participation were introduced and discussed in Part I of our two-part series. Part I discussed the need for active physician participation and involvement, the need and importance of a strategic business plan, the ACO structure and choice of legal entity, participation and time commitment, as well as provided some insight into the capital investment required for the formation of an ACO.

Part II continues to touch on other key areas needed for successful physician integration. Areas to be discussed in this part include:

  • How the ACO will incentivize providers
  • How the ACO will work with providers
  • How the ACO will collect information
  • Tracking and dividing profits
  • Electronic health record management
  • Medical group concerns

How the ACO will incentivize providers

A recent survey by Merritt Hawkins revealed that physicians perceive health reform as negative and not representative of their best interest. The majority of those surveyed were physicians who owned their own practice, were between the ages of 46 and 50, worked an average of 50 to 60 hours per week and indicated they would take steps in the foreseeable near future to change their current practice style.

With this said, how can the current health care model transition, incentivize and convince physicians that the ACO model will work best, not just for the patient population they serve, but also for them?

Attracting and retaining the diminishing finite number of primary care physicians, in the current and entering workforce, will require not only monetary incentives, but work-life balance incentives. Generational groups are re-defining the United States workforce. Attracting established physicians will require monetary and financial security incentives, while attracting younger physicians will require not only monetary and financial security but also more work — life balance incentives. Compensation and ACO ownership agreements will need to be not only STARK compliant, but will also need to be structured to fit the changing workforce.

Financial incentives, which are important to every generational group, will be the largest incentive. Achieving the greatest financial rewards will require physician participation, and those physicians who understand that participation and attaining a controlling position in the ACO will benefit the most. The key to success will be to control rather than be controlled.

How the ACO will work with providers

ACOs and providers will continue to work together as in the past. Physicians and other health care providers will continue to see and provide services to patients, they will continue to remit their claims through electronic systems and they will continue to receive fee-for-service payments. What will be different in an ACO environment is that providers who meet the health care performance standards set by the Center for Medicare & Medicaid Services (CMS) will now be eligible to participate and receive shared savings payments under the Medicare Shared Savings Program (MSSP).

How the ACO will collect information

CMS proposes to assist ACOs at the onset by providing beneficiary-identifiable data and aggregated data reports to the ACO so as to assist the ACO in benchmarking the demographic data for its patient population.

Tracking and dividing profits

CMS has identified 65 quality measures ACOs must meet in order to qualify for sharing in the MSSP. The 65 measures are organized into five domains. The five domains and the number of measures in each include:

1. Patient/Caregiver Experience — 7 measures
2. Care Coordination — 16 measures
3. Patient Safety — 2 measures

4. Preventive Health — 9 measures

5. At-Risk Population/Frail Elderly Health — 31 measures

Each of the measures will be considered on a sliding scale with two points as the maximum possible points for each measure. The total number of points and the maximum points awarded for each domain are identical under each of the risk models. The shared savings difference will be based on the risk model chosen at the onset by the ACO, i.e. the “One-Sided” Risk Model or the “Two-Sided” Risk Model.

Under the One-Sided Risk Model, the shared savings could be as high as half of the total savings, and under the Two-Sided Risk Model, the shared savings could be as high as 60% of the total savings. Under each of the risk models, CMS proposes to withhold 25% of the shared savings due as a reserve against future potential losses.

Under the One-Sided Risk Model, the ACO would share only in savings generated in the first two performance years under the initial three-year agreement. In the third and subsequent years, the ACO would also share in any potential downside risk and total shared savings are capped at 50% of total savings.

Under the Two-Sided Risk Model, the ACO would share in savings and losses in all three performance years. As an incentive to choose the Two-Sided Risk Model, CMS has proposed to increase the shared savings to 60%.

Failure to meet the quality performance thresholds for all of the proposed measures would disqualify the ACO from receiving shared savings even if the ACO has been successful at reducing costs.

 Electronic health record management

Participation in the MSSP will require reporting on certain quality performance measures through a newly developed electronic data base driven system — ACO Group Practice Reporting Option tool (ACO GPRO). This new tool will interface with electronic health record (EHR) technology which will collect the required quality data for submission to CMS.

Medical Group concerns

In July 2011, the MGMA’s comment letter, posted at, outlined medical group concerns with the proposed ACO rules. Some of the key points in the letter include:

  • Complexity of program favors large hospital-centric health systems
  • Shared savings must be clearer and more financially compelling
  • Change from a retrospective patient assignment process to a prospective model
  • Importance of determining the appropriate quality measures


Changing the current health care model will require not only transitional changes to how the current and future physician workforce is compensated, but also changes to how patient information is reported and maintained. The ACO model requires large, upfront investment costs with no guarantees that a breakeven point will be attained. Receiving a piece of the shared savings has multiple stages, containing many “ifs” and no guarantee of any shared savings.

Many attempts at changing the United States health care model have been made in the past and physicians’ current view on health care reform remains very skeptical. Whether the ACO model replaces the current model remains to be seen.

 Ronald D. Finkelstein, CPA/ABV is principal in charge of Morrison, Brown, Argiz & Farra, LLC’s Healthcare Practice. Lydia M. Glatz, CPA is a senior manager and health care accountant with Morrison, Brown, Argiz & Farra, LLC. Either Ronald or Lydia can be reached at (954) 760-9000.

 Morrison, Brown, Argiz & Farra LLC is also a proud member of the National CPA Health Care Advisors Association. HCAA is a nationwide network of CPA firms devoted to serving the health care industry. Members provide proactive solutions to the accounting needs of physicians and physician groups. For more information contact the HCAA at