ACO REACH in Practice

Meet Dr. Victoria Ruiz

Dr. Ruiz is a dedicated primary care provider (PCP) based in Raleigh, North Carolina. Dr. Ruiz serves a panel of 500 Traditional Medicare patients aligned with her practice.

Note: Dr. Ruiz is not a real physician — and the data shown in this example is just a representation of the ACO REACH Model in practice. The terms applicable to any individual practitioner or practice will depend on many factors and may differ substantially from those reflected in this illustrative example.

ACO REACH in Practice

Meet Dr. Victoria Ruiz

Dr. Ruiz is a dedicated primary care provider (PCP) based in Raleigh, North Carolina. Dr. Ruiz serves a panel of 500 Traditional Medicare patients aligned with her practice.

Dr. Ruiz is part of a REACH ACO

When she joined the ACO, they analyzed the historical spending patterns for her Medicare patients. In 2019, the average spending for primary care office visits per beneficiary per month (PBPM) was $39.24.

This PBPM amount forms the basis for determining the benchmark spend for the performance year and, ultimately, the capitation amount. Put simply, it’s about how much Dr. Ruiz will be paid by the ACO for each Medicare patient in her care.

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$39.24

Per Beneficiary Per Month

Dr. Ruiz, alongside her ACO, reviewed how her Medicare patients’ overall historical costs compared to the benchmark set by Medicare for her community.

This benchmark is a blend of her own historical performance and that of her peers. It also incorporates the clinical severity of her patients.

If the total spend for her Traditional Medicare members is below the benchmark, she will earn back a portion of the savings. Medicare keeps some, and then the ACO and Dr. Ruiz will share the rest of the savings.

Different REACH ACOs have different ways to share in the savings, with some offering a higher portion of the shared savings for a lower monthly per-member payment.

Some REACH ACOs will also offer a higher portion of shared savings if the physician is also willing to take downside risk. Downside risk means that, if savings are not achieved, money is owed back to Medicare.

Dr. Ruiz’s historical spending falls below the benchmark, and she opted for a moderate level of shared savings risk, with a 50% shared savings potential.

The ACO and Dr. Ruiz looked at how her historical spend breaks down across different categories.

Based on this analysis, she knows that Part B spending is one of the main cost drivers of her overall spend.

Fortunately, the ACO she belongs to is building out a preferred provider network of aligned specialists in her area that will help bring this number down.

Now in her first year with ACO REACH, Dr. Ruiz receives stable monthly payments at a PBPM rate of $41.30.

With 500 active beneficiaries, her revenue for these patients amounts to $20,700 per month.

500

Medicare Patients

$41.30

Capitation Amount

$20,700

per month

By shifting to this new payment model that is not tied to the volume of visits she can fit into one day, she is able to personalize how she spends her time with patients.

She can allocate more time for complex patients and employ various communication methods for those needing frequent check-ins.

Dr. Ruiz can also more effectively use a team-based approach, to make sure patients get the care they need, including specialized services tailored to their health and social needs.

She is also on track to achieve shared savings.

While she has increased her SNF spending, this has been more than offset by a corresponding decrease in inpatient hospital spend. She has also started to leverage her ACO’s preferred network of specialists, further adding to her shared savings forecast.

Potential Shared Savings

$219,500

Total Annual Forecast

$439

Estimated Savings PBPY

Key Drivers

SNF DAYS

+4%

+$21,134

driving costs

Hospitalizations

–6%

-$187,222

driving savings

Preferred Specialist Referrals

–5%

-$146,931

driving savings

Dr. Ruiz is on track to achieve total savings of $440k across all of her Traditional Medicare patients.

Based on her ACO contract, and the way that Medicare calculates shared savings with the ACO, she could then retain up to $110k of this amount.

Total Estimated Annual Revenue

$357,500 per year

Steady Revenue

$247,800 per year

Performance-Based Payments

$109,700 per year

In this scenario, her total annual compensation would be approximately $358k: $21k per month for the capitation revenue ($248k annually), plus $110k in shared savings annually.

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See what VBC could mean for your practice, in practice.

Share a few key details with us to receive a personalized, data-driven analysis tailored to your specific practice.

How much more could your practice earn with Pearl?

Try out Pearl's Value-Based Care Advisor tool to find out how much more your practice could earn with ACO REACH.

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Financial Impact of Medicare's ACO REACH Model

Medicare’s ACO REACH model provides an opportunity for PCPs to capture the full dollar value generated from effectively managing care for Medicare patients. PCPs can use these funds to reinvest in their staff, their practices, and their patients.

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