Is There an ACO in Your Future?
Given the rising costs of health care, government and private payors are looking for alternatives that would encourage efficiency and cost containment while maintaining quality patient care. One of the options that has recently received attention is the accountable care organization (ACO).
The following is a discussion of the ACO model as well as questions that need to be answered before making the decision to join an ACO:
What is an ACO?
ACOs are provider collaborations that integrate groups of physicians (primary care and specialists), hospitals and other providers around the ability to receive shared savings bonuses by exceeding measured quality targets and demonstrating real reductions in overall spending growth for a defined population of patients. The patient populations must be a sufficient size to support comprehensive performance measurement. Spending benchmarks would be calculated by the payor using the average payment history for the patient population within the ACO. The ACO would be eligible to receive annual bonus payments if the actual costs for the year were below the benchmark and the quality of the services provided met the standards set by the payor.
Key elements of an effective ACO are proposed to include the following:
- Patient-centered “medical homes” that deliver primary care and coordinate with other providers.
- Aligned networks of specialists, ancillary providers and hospitals focused on enhanced outcomes.
- Emphasis on effective clinical care integration and coordination mechanisms.
- Payor-provider contracted relationships and reimbursement models that facilitate and reward cost-effective, high-value (not high-volume) health care.
- Population health information infrastructure to enable community-wide care coordination, including integrated electronic health records (EHRs).
To achieve cost reduction, it is expected that the ACO will place heavy emphasis on preventive care, reducing hospital re-admissions, and selecting diagnostic and treatment options based on evidence-based outcome studies. Greater emphasis will be placed on the primary care physician as the coordinator of care for the patient in collaboration with specialists. Patients may also be incentivized to be more efficient in their consumption of health care through reduced premiums or co-payments.
ACOs can be organized in a number of ways, including:
- Integrated delivery systems (Mayo Clinic, Intermountain Health Care) — a single organization that includes one or more hospitals and a large group of employed physicians.
- Physician-hospital organizations/practice networks (Middlesex Health System, academic medical centers) — a collaboration between hospitals and affiliated or independent physicians or physician groups.
- Regional collaboratives (Rochester, NY; Indianapolis, IN) — regional health improvement collaboratives design and implement programs ranging from public reports on the quality and cost of physicians, hospitals, health plans, and other health-care providers, to projects that reduce hospital-acquired infections and improve care for people with chronic diseases.
The success of the ACO is highly dependent on an integrated EHR that could be accessed by all providers within the ACO and an agreement for the equitable distribution of shared savings between all of the stakeholders.
Currently, there are three pilot sites under the direction of the Dartmouth Institute for Health Policy and Clinical Practice and the Edelberg Center for Health Care Reform at the Brookings Institution. They are:
- Carilion Clinic in Roanoke, VA.
- Norton Healthcare in Louisville, KY.
- Tucson Medical Center/Old Pueblo Physicians in Tucson, AZ.
Medicare and Accountable Care
The recently enacted Patient Protection and Affordable Care Act includes a provision that establishes the ACO as an alternative to the current fee-for-service mechanism for hospital and physician compensation for Medicare services. The Medicare Shared Savings Program (Section 3022 of the act) creates a separate ACO demonstration project within the Medicare program. No later than Jan. 1, 2012, the HHS secretary is required to establish a shared savings program specifically relating to ACOs. This program is intended to promote accountability for a patient population and to coordinate items and services under parts A and B, as well as to encourage investment in infrastructure and redesigned care processes for high-quality and efficient service delivery.
In order to be eligible to participate in the shared savings program, an ACO must, among other actions, establish a mechanism for shared governance and a formal legal structure to receive and distribute payments for shared savings among the following types of providers:
- Physicians in group practice arrangements.
- Networks of individual practices of physicians.
- Partnerships or joint venture arrangements between hospitals and physicians.
- Hospitals and their employed physicians.
- Such other groups of providers of services and suppliers as the secretary determines appropriate.
The ACO must agree to become accountable for the quality, cost and overall care of the Medicare fee-for-service beneficiaries assigned to it (not fewer than 5,000 individuals). Medicare beneficiaries will be assigned to an ACO based on the selection of primary care service providers. Each ACO will be required to have a sufficient number of primary care professionals to care for the assigned Medicare beneficiaries. Participation with CMS will be by written agreement for a period of no less than three years.
With respect to leadership and management structure, the ACO must have clinical and administrative systems capable of the following:
- Promoting evidence-based medicine and patient engagement, and reporting on quality and cost measures.
- Coordinating care, such as through the use of telehealth, remote patient monitoring and other such enabling technologies.
- Demonstrating compliance with the patient-centeredness criteria specified by the secretary, such as through the use of patient and caregiver assessments or the use of individualized care plans.
Quality, an integral part of the ACO model, will be measured and assessed through the following:
- Clinical processes and outcomes.
- Patient and, where practicable, caregiver experience of care.
- Utilization (such as rates of hospital admissions for ambulatory care sensitive conditions).
Each ACO will be required to submit data in a form and manner specified by the secretary, as deemed necessary, to allow the proper evaluation of the quality of care furnished by the ACO. Such data may include care transitions across health-care settings, including hospital discharge planning and post-hospital discharge follow-up care.
Once the demonstration period is complete, if the secretary can demonstrate a cost savings to the Medicare program as well as an improvement in quality outcomes, it is likely that the ACO model will be expanded to all providers.
