Accountable Care Organizations (ACOs) are groups of health care providers and hospitals who partner together to provide high-quality, coordinated care and decrease overall costs for a defined population, with the goal of sharing these cost savings.¹ The first Medicare ACOs were approved as part of the Affordable Care Act in 2009.

Bundled payment is an alternative reimbursement model that is designed to help move from the traditional fee-for-service (FFS) payment to value-based care. With bundled payments, all providers and/or health care facilities associated with a patient undergoing a specific episode of care, or “clinical episode,” are paid a single fixed amount or “target price.” All providers and health care facilities share in the financial risks and outcomes associated with the episode of care.

According to the American College of Physicians,“ capitation is a fixed amount of money per patient per unit of time paid in advance to the physician [or health care provider] for the delivery of health care services.”¹ The amount of money actually paid depends on the range of services provided, how many patients are involved, and the duration of time in which the services are provided.¹ The capitation rate is often set at PMPM (per member, per month) or PMPY (per member, per year). The rates used in capitation are determined using the local costs and average utilization of services; as a result, rates can differ from one part of the country to the other. Before a capitation agreement is made, a list of specific services that must be provided to patients is included in the contract.

HEDIS is a comprehensive set of standardized performance measures designed to provide purchasers and consumers with the information needed for reliable comparison of health plan performance.^1-3 Performance is evaluated using over 90 measurements across 6 domains of care: effectiveness of care, access/availability of care, experience of care, utilization and risk-adjusted utilization, health plan descriptive information, and measures collected using electronic clinical data systems.² Claims and survey data are aggregated and analyzed retrospectively to depict the quality of care and customer service delivered to patients.

MACRA is legislation signed in April 2015 that is designed to transform the basis of health care clinician payment from volume to value.¹ MACRA created the Quality Payment Program (QPP), which repealed the sustainable growth rate formula used to determine physician and other clinician FFS payment rates in Medicare as well as creating the MIPS.^2,3 It also created bonus payments for entities participating in APMs.