Most Americans are familiar with the typical fee-for-service health care model: A patient visits a hospital, stays until reaching a certain health level, and then is discharged, without much collaboration between the hospital and the post-treatment patient. The Patient Protection and Affordable Care Act (PPACA) proposed a different model as part of its overall aim to improve the quality and reduce the costs of health care services.
Under the PPACA-created Medicare Shared Savings Program, providers are encouraged to organize themselves into accountable care organizations, or ACOs, to contract with the government on Medicare. ACOs can take many forms—networks of individual practices, hospital joint ventures and medical group practices are just a few examples. Providers in an ACO will continue caring for Medicare beneficiaries as they always have, but now with better coordination. Medicare will continue paying all of the providers the same fee-for-service payment that they’ve always received.
A provider’s market share will be determined within primary service areas (PSAs), defined in simplest terms as the ZIP codes from which 75 percent of the ACO’s patients are drawn. The PSA concept could be a burden for providers not used to the calculation and potentially lacking sufficient or accurate data to make the calculation. There’s also the possibility that a network could change. If, say, a new group of orthopedic surgeons joins a network, it could throw off the whole market share determination and trigger review.