Survey of First-year ACOs Reveals Operational Challenges with CMS Data

Tony Berberabe, MPH @OncBiz_Wiz
Published: Wednesday, Jan 29, 2014

Accessing and processing data from the Centers for Medicare & Medicaid (CMS) is the leading operational challenge faced by accountable care organizations (ACOs), according to a large-scale survey conducted by the National Association of ACOs. Thirty-five ACOs responded and were representative of the size and geographic distribution of the ACO population. Size ranged from 5100 to 78,000 assigned Medicare beneficiaries.

ACOs, which are in their first year of operation, report challenges concerning CMS data and learning to access it and process it. When asked, “What is the most vexing or frustrating problem you have encountered in the first year of implementing your ACO?” they reported finding suitable software, meeting implementation schedules, delays in getting claims data, new skill sets to analyze data, addresses of assignees, slow stand-up of IT system, data inconsistency from CMS, and translating the data into actionable information for care managers and providers.

In addition, first-year start-up costs for ACOs were found to be higher than estimated by CMS but considerably lower than many other estimates. The average start-up cost per ACO was $2,000,000, suggesting the high level of risk ACOs are willing to endure in order to succeed. Because of slow data processing and complex reconciliation, it won’t be until an ACOs’ second year of operations when cash flow can be replenished with share savings from CMS (if there are any).

This means that the average ACO will risk $3.5 million plus any feasibility and pre-application costs until it can see any cash flow relief from possible savings. The survey did not ask about source of funds, but about one-third of the ACOs have assumed legal debt to finance their startup.

ACOs are predicting very mixed financial results from their first year of operation, with the majority predicting break even and the aggregate program losses to offset almost equally the gains. The average ACO will spend a total of $850,000 in the first 12 months of operation.

The 11 question survey covered first year start-up costs, financial prospects for the first year of operation, operational problems, claims data processing, costs of internal and external IT services, and satisfaction with IT services.

The survey found that most ACOs use a mix of internal and external resources and spend about an equal amount for each. A small minority of ACOs conduct their IT exclusively with either internal or external resources. Smaller ACO’s were less satisfied with their IT services.

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