She is a primary care provider (PCP) who practices in Raleigh, North Carolina. In her patient panel, she has 213 Traditional Medicare patients aligned to 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.
When she signed up with the ACO, they reviewed the historical spending patterns for her Medicare members.
The 2019 spend for primary care office visits for her Medicare patients was $56.00 Per Member Per Month (PMPM).
This PMPM amount is approximately what she will get paid for each active Medicare patient that is attributed to her practice.
The ACO walked Dr. Ruiz through how the overall historical cost of her Medicare patients compares to the benchmark and regional rate that Medicare sets for her community.
The 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 less than 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 spend is below the benchmark, and she is only comfortable with a moderate level of shared savings risk. She joined an ACO that best met her risk tolerance, with 25% 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, Dr. Ruiz is in her first year of in ACO REACH, she is getting stable monthly payments at the per-member per-month (PMPM), or capitation, rate of $56.00
Since she has 213 active members, that means her revenue for these patients will be $11,928 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.
For complex patients, she is able to have longer visits. For patients who need more frequent check-ins, she is able to use different ways of communicating like secure messaging and video calls.
Dr. Ruiz can also more effectively use a team-based approach, to ensure that patients are getting not only the frequency of care that they need, but the specialized services specific to their own health and social circumstances.
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.
Dr. Ruiz is on track to achieve total savings of $240k across all of her Traditional Medicare patients.
Based on her ACO contract, and the way that Medicare calculates shared savings with the ACO, she would then retain $23k of this amount.
In this scenario, her total annual compensation would be approximately $166k: $11,928 per month for the capitation revenue ($143k annually), plus $23k in shared savings.
Medicare’s Accountable Care Organization Realizing Equity, Access, and Community Health (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.
Learn more about the financial impact of Direct Contracting
