Shifting ACO Rules Create Uncertainty for Home Health Agencies

Home health agencies are still unsure what a recent overhaul of Medicare’s accountable care organization (ACO) program means for them. They will be affected, experts say, but how and to what extent remains unclear.

Called “Pathways to Success,” the new policies for ACOs were announced by the Centers for Medicare & Medicaid Services (CMS) about a month ago. Among other changes, the new policies shorten risk-free periods and offer more regulatory flexibility, including for providing telehealth to people in their homes. The effects of these modifications will continue to be monitored by the National Association of ACOs (NAACOS).

“[The rule’s] final impact on ACOs or the broader health community is not yet clear,” the association told Home Health Care News in a statement. “However, it’s almost certain given the reach ACOs now have within our health system that home health agencies will experience at least some residual effect.”


Becoming involved in an ACO is an attractive target for many home health companies, as ACOs often involve numerous powerful local health care providers that could be valuable sources for referrals.

If an ACO hits certain benchmarks, ultimately reducing Medicare spending, it is rewarded by getting a portion of those savings back. The idea is that this bonus reimbursement is then split up between the health care providers that make up the ACO.

When included in ACOs, home health agencies have proved their value. For example, VNA Care — New England’s largest home health, hospice and palliative care provider — has helped nonprofit ACO Atrius Health save — and be reimbursed — millions of dollars.


Other home health agencies haven’t always been as lucky. In the past, it’s has been difficult for them to be chosen for participation in ACOs, which serve 10.4 million of 38 million fee-for-service Medicare beneficiaries. Or if they are chosen, they struggle to be compensated fairly.

There are a variety of ACO models that CMS has rolled out in the years since the program was created under the 2010 Affordable Care Act. The new Pathways to Success program is meant to both give providers more tools to succeed in the ACO model and to accelerate their ability to generate cost savings for the Medicare program, CMS stated.

Home health opportunities

But now, some experts are hopeful that rule changes ushered in by Pathways to Success will make it easier for home health agencies to get into the game.

Increased awareness and openness toward technology is especially promising to Gina Mazza, partner and director of regulations and compliance at Fazzi Associates, a Northampton, Massachusetts-based home care and hospice consulting, training, outsourcing, benchmarking and research firm.

“I’m encouraged by the fact that there is an awareness that if we’re looking to innovate — which is what one of the premises of an ACO is — there has to be some flexibility in order to do that,” she told HHCN. “I think it’s important for the patients and for community-based care.”

Similarly, NAACOS has lauded the telehealth changes, which provide greater certainty telehealth patients will be included for ACOs’ financial benchman calculations.

“Since ACOs are accountable for the total cost of care, optimal use of telehealth can be a win for both an ACO and a patient through greater convenience,” NAACOS said. “Under these changes, patients can receive certain follow up visits at home and ACOs can stave off potentially expensive and unnecessary visits to the ER.”

While increased use of in-home care could make it easier for home care providers to get a seat at the table, it’s up to agencies to sell themselves to ACOs, Mazza said.

“If an agency wants to be competitive, whether it’s ACOs or value based purchasing pilots or any other project, they have to be constantly working on patient-centered outcomes [and] improving efficiencies,” she said. “It could be related to cost, waste, decreasing waste, as well as looking at some really important patient outcomes.”

The best way to demonstrate their worth is using data, such as Consumer Assessment of Healthcare Providers and Systems (CAHPS) survey results and patient satisfaction scores, Mazza said.

“There’s no doubt about it that home health has such an important role to play as we look toward the future and look toward our aging population,” she said. “I can’t see any other way that our health care system will be successful without that really important component of home health care.”

Pathway pushback

While some of the changes in Pathway to Success are positive, some could hurt ACOs, such as the shortening of the risk-free period, according to NAACOS .

“Becoming a well-functioning ACO takes time and requires building of IT infrastructure, hiring care coordinators, changing the culture of providers, among other tasks,” the organization said. “We remain concerned about CMS’s retention of a two-year period in the no-risk model for many ACOs and the distinction between high- and low-revenue ACOs.”

A shorter risk free period means less time for ACOs to get up and running before they are held responsible for meeting certain savings benchmarks. That responsibility comes with the stipulation that ACOs must pay back benchmarks they miss.

NAACOS worries the rule change could set ACOs up for failure or discourage health care organizations from participating in the voluntary program.

Additionally, NAACOS — with support from at least 11 other health care industry groups — has asked for more time to process the rules changes. It has requested CMS extend the application deadline to participate in the new Pathways to Success ACO program from Feb. 19 to March 29.

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