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Accountable Care Organizations
Value Metrics and Capital Formation




ISBN 9781466581838
Published June 5, 2013 by Productivity Press
378 Pages - 28 B/W Illustrations

 
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Book Description

An accountable care organization (ACO) is a healthcare organization characterized by a payment and care delivery model that seeks to tie provider reimbursements to quality metrics and reductions in the total cost of care for an assigned group of patients. Accountable Care Organizations: Value Metrics and Capital Formation explores the historical background and evolution of the ACO model as the basis for the development of the value metrics and capital formation analyses that are foundational to assessing the current efficacy and capacity for change.

The book examines the four pillars of value in the healthcare industry: regulatory, reimbursement, competition, and technology in addressing the value metrics of ACOs, including requirements for capital formation, financial feasibility, and economic returns. It focuses the discussion of non-monetary value on a review of aspects of population health within the context of such objectives as improved quality outcomes and access to care.

  • Explains why ACOs might be the cost-containment and quality improvement answer the industry has been looking for
  • Describes the circumstances and capital structures where ACOs represent a sound investment
  • Includes a foreword by Peter A. Pavarini, Esq.

The book examines the positive externalities of the ACO model, including results for third parties outside the basic construct of the ACO contracts shared savings payments. It also discusses the potential role and opportunities for consultants in assisting their provider clients in the consideration, development, implementation, and operation of an ACO.

Table of Contents

Background and the Path to ACOs
Introduction
History of Accountable Care
     History of Managed Care
     ACO: Another Name for Managed Competition
     The Path to Accountable Care Organizations
     Setting the Stage for ACOs: An Environment Demanding Change
Chapter Summary
Endnotes

Federal ACOs
Purpose of Accountable Care Organizations
Overview of Value-Based Purchasing
The Patient Protection and Affordable Care Act (ACA) and the Medicare Shared Savings Program
     Overview and Intent of the MSSP
     Related Affordable Care Act Provisions
          Center for Medicare and Medicaid Innovation
          Value-Based Purchasing Demonstrations
          Medical Home Model
          Bundling Demonstration Project
MSSP Proposed Rule
     Overview of the Main Provisions of the MSSP Proposed Rule
     Industry Response
     Significant Changes between the MSSP Proposed and Final Rule
MSSP Final Rule
     Operational Terminology
          Accountable Care Organization
          ACO Participant
          ACO Provider/Supplier
          ACO Professional
     Development
          Eligible Entities
          Structural Requirements
          Governance
     Implementation
          The ACO Agreement
          Accountability: The Assignment of Medicare Beneficiaries
     Operation
          Quality and Other Reporting Requirements
          Monitoring and Termination
          Reimbursement
          Shared Savings Payments
Subsequent ACO Models under Development
     Pioneer ACO Model
     Advanced Payment ACO Model Initiative
     Accelerated Development Learning Sessions
Proposals for State Payors: Medicaid ACOs
Industry Feedback and Agency Response
     American Hospital Association (AHA)
     American Medical Group Association (AMGA)
     American Medical Association (AMA)
     American Academy of Family Physicians (AAFP)
     America’s Health Insurance Plans (AHIP)
     Physician Group Practice Demonstration Project Participants
     Medicare Payment Advisory Commission
Chapter Summary
Endnotes

Commercial ACOs
What Are Commercial ACOs?
     Distinguishing between Federal ACOs and Commercial ACOs
          Regulatory
          Reimbursement
          Competition
          Technology
Development
     Eligible Entities
     Structural Requirements
          Coordination of Care
          Technology
     Governance
Implementation
     The ACO Agreement
     Accountability
Operation
     Quality and Other Reporting Requirements
     Monitoring
     Reimbursement
          Fee-for-Service
          Pay-for-Performance
          Bundled Payment
          Partial Capitation
          Full Capitation
          Global Budget
          Tiered Payment Models
     Shared Savings and Losses
Chapter Summary
Endnotes

Hypothetical Models for the Development and Operation of ACOs
Structural Features
     Federal ACOs
     Commercial ACOs
          Traditional Structure
          Single Healthcare Organization Structure
Transition Challenges
Operational Challenges
     Federal ACOs
     Commercial ACOs
Competitive Marketplace Challenges
     Federal ACOs
     Commercial ACOs
Chapter Summary
Endnotes

Impact of ACOs on the Healthcare Industry: Addressing Industry Concern
Regulatory Concerns
     Impact on Providers
          Antikickback Laws

Capital Finance Considerations for the Development and Operation of ACOs
Background
     History of Healthcare Financing
     The Financial Crisis: 2007–2009

Financial Feasibility Analysis for ACO Investments
Case Studies: Real Investments of Capital
The Investment Decision
Value Metrics
     Cash Flow Analysis
     Feasibility Analysis
     Payback Period and Discounted Payback Period Methods
     AARR Method
     Net Present Value
     Internal Rate of Return
     Further Feasibility Analysis
Chapter Summary
Endnotes

Considerations of Value for the Positive Externalities of ACOs
Defining Value
Value to SOCIETY
     Monetary Value
          Cost of Healthcare
          Productivity Measures
     Nonmonetary Value

The Role of the Healthcare Consultant
Overview
Economic and Financial Consulting Services Relevant to ACOs
     Episodic Services
     Continuity Services
     Value Metric Services
     Financial Feasibility Services
     Valuation (Financial Appraisal) Services: Establishing Fair Market Value and Commercial Reasonableness
Selecting and Working with Consultants
     Consultant Skills and the Body of Knowledge
     Organizational and Strategic Capabilities
     The Consulting Process
     Data Gathering & Research
     The Consulting Analytical Process
     Technical Tools
     Reporting of Consulting Engagement Deliverables
Chapter Summary
Endnotes

Conclusion

Epilogue

Bibliography
Regulatory
Reimbursement
Competition
Technology

Glossary

Literature Review
Index

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Author(s)

Biography

Robert James Cimasi, MHA, ASA, FRICS, MCBA, AVA, CM&AA, is chief executive officer of Health Capital Consultants (HCC), a nationally recognized healthcare financial and economic consulting firm headquartered in St. Louis, Missouri, since 1993. Cimasi has more than 25 years of experience in serving clients, with a professional focus on the financial and economic aspects of healthcare service sector entities including valuation consulting and capital formation services; healthcare industry transactions including joint ventures, mergers, acquisitions, and divestitures; litigation support and expert testimony; and certificate-of-need and other regulatory and policy planning consulting.

Cimasi holds a master’s in health administration from the University of Maryland and holds several professional designations: Accredited Senior Appraiser (ASA–American Society of Appraisers), Fellow Royal Intuition of Chartered Surveyors (FRICS–Royal Institute of Chartered Surveyors), Master Certified Business Appraiser (MCBA–Institute of Business Appraisers), Accredited Valuation Analyst (AVA–National Association of Certified Valuators and Analysts), and Certified Merger & Acquisition Advisor (CM&AA–Alliance of Merger & Acquisition Advisors).

He has served as an expert witness in numerous court cases and has provided testimony before federal and state legislative committees. He is a nationally known speaker on healthcare industry topics, the author of several books, including The Adviser’s Guide to Healthcare (AICPA. 2010) and Healthcare Valuation: The Financial Appraisal of Enterprises, Assets, and Services in the Era of Reform (Wiley, 2005), as well as numerous chapters, published articles, research papers and case studies, and is often quoted by healthcare industry press.

In 2006, Cimasi was honored with the prestigious Shannon Pratt Award in Business Valuation conferred by the Institute of Business Appraisers. Cimasi serves on the editorial board of the Business Appraisals Practice of the Institute of Business Appraisers, of which he is a member of the College of Fellows. In 2011, he was named a Fellow of the Royal Institution of Chartered Surveyors (RICS) and serves on the editorial board of the RICS Modus Americas journal. Cimasi is also the current chair of the American Society of Appraisers Healthcare Special Interest Group (ASA HSIG) subcommittee.

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Robert James Cimasi

Chief Executive Officer, Health Capital Consultants, LLC
St. Louis, Missouri, United States

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Reviews

"Accountable Care Organizations is the first comprehensive text on capital formation and value metrics for this new healthcare business model… I can think of no one more qualified to write it than Bob Cimasi at Health Capital Consultants ... it is destined to become a classic work … read, review, refer, and profit by this valuable resource."
—Dr. David Edward Marcinko, FACFAS MBA, Institute of Medical Business Advisors, Inc.

"The author offers various models and policy initiatives, some of which are in partial test, and updates on other initiatives at beginning stages of organization."
—Blue Heron Journal, March 2014

An excerpt from the foreword:

Although many authors, including the one writing this foreword, have previously attempted to explain the ACO concept in practical terms, virtually no one thought to thoroughly analyze the financial underpinnings of this model until Bob Cimasi decided to write this book. What an ambitious work it is! Even though most existing ACOs remain gestational or in their earliest years of operation, Mr. Cimasi and his associates at Health Capital Consultants have managed to assemble an authoritative body of information on this rapidly evolving subject and to present their findings in an easily understood manner.

Together with many of my colleagues in the American health law bar, I have long respected Bob Cimasi’s passion and talent for unraveling complex healthcare equations and objectively assigning value to all or part of a business or relationship. That was difficult enough to do in a traditional fee-for-service environment; it will be much harder as the nation transitions to shared savings, bundled payments and other new methods of value-based purchasing. With the publication of Accountable Care Organizations: Value Metrics and Capital Formation, readers will now have insight on the principles and methods Mr. Cimasi and his team of experts carefully use to appraise transactions within a changing healthcare payment and delivery system. This text is much more than a compilation of educational resources on a currently hot topic. Rather, it could become a seminal work relied upon by all stakeholders in a transformed healthcare marketplace. I cannot think of anyone more qualified than Bob Cimasi to take on such a daunting task.

It is always a privilege to be asked to read a manuscript before it becomes publicly available. This time, however, I found reading Accountable Care Organizations: Value Metrics and Capital Formation to be like looking through a window on a brave new world. I found myself asking: is this finally the way Americans will learn how to assure quality, efficiency and fairness in one of the most important aspects of their daily lives? I hope the readers of this book will be challenged to ask that same question as they seek to understand the ins and outs of ACOs.
—Peter A. Pavarini, Esq Partner, Squire Sanders (US) LLP, July 2012