A New Model

There is much discussion about Accountable Care Organizations (ACOs), or “new” payment models legislated under PPACA (Health Care Reform). The program, which is starting January 1, 2012, is envisioned to be very diverse in terms of membership and structure, but ultimately will be primary care oriented.

ACOs are collaborations of primary care professionals and other health service providers, such as other physicians and hospitals. They are organized around the capacity to improve health outcomes and the quality of care while slowing the growth in overall costs for a population of patients (at least 5,000 patients) cared for by a well-defined group of primary care professionals. ACOs have the capabilities of measuring improvement in performance and receiving payments that increase when such improvements occur. Many physician groups are eligible to share in savings demonstrated by the ACO.

From a provider perspective, an ACO is a “legal entity” meeting specific program criteria, charged with coordinating care for a patient population in such a way as to “measurably” drive better quality and lower cost. In return for successfully demonstrating better quality and lower cost, the ACO will participate in shared savings. An ACO will receive a one-time shared savings payment from CMS (per year) that presumably would be distributed to the various providers in the ACO according to rules and policy developed by the ACO (see chart).

From a CMS perspective, ACOs are being recognized as a promising new payment model that could successfully start to realign the current payment system to better reward improvements in the efficiency of care delivery by supporting health care providers’ efforts to improve quality and bend the cost curve with the distribution of shared savings.

As mentioned above, the goal of the ACO program is to increase quality and decrease cost. In some circles, ACOs are seen as PQRS on steroids. ACOs are not HMOs. While the goals are similar, the tactics are very different. ACOs are not envisioned to pay for medical services. Certain ACO models have the latitude to incorporate capitated payments, but ACOs accommodate the current Fee-For-Service (FFS) payment model. In this case, the ACO will simply track quality and costs across the ACO group and, should goals be met, CMS will issue the ACO a shared savings check at the end of the period.

New Programs Always Have Wrinkles

This is a very ambitious project. As ACO regulations become available and the medical industry more closely examines them, a number of hurdles have appeared:

• Cost: ACOs will likely face start-up and first-year costs six to 14 times higher than HHS has estimated, according to a study released by the American Hospital Association.
• EHR: 50% of participating providers must successfully meet EHR meaningful use requirements, which may be difficult.
• Specialty physicians: This program is geared toward primary care, and there does not seem to be a defined role for specialist physicians at this time.
• Lackluster industry support: To date, a number of significant health care organizations have expressed serious reservations about their participation in the program without significant structural changes: Mayo Clinic, Cleveland Clinic, Geisinger Health Systems, and Intermountain Health.
• Onerous reporting: ACOs will be expected to report on over 60 “quality reporting metrics”—several times higher than both hospitals and physicians are reporting today.
• The unknown: Providers will not know who their patients are until they are through the first full year of the new care delivery model. In addition, those anonymous ACO patients may seek health care anywhere they want. If they run up a health care bill somewhere else, their ACO is still responsible for the cost. This puts the ACO at risk.

Key Principles of Accountable Care

There are many underlying causes of poor performance, including a lack of clarity about aims and about whose perspectives are most relevant. Because providers are fragmented and unable to coordinate care well, they tend to accept responsibility only for what they directly control. The payment system also drives fragmentation, rewards unnecessary care, and penalizes care coordination and overall efficiency. The driver of poor performance boils down to inadequate information to support provider and patient confidence about the value of reforms.

When the principles of accountable care are brought to the forefront, many causes of poor performance can be improved upon. Establishing clear, patient-focused aims and metrics based on better overall health via higher quality medical care at lower costs is a pathway to improvement. The ACO philosophy is that provider organizations can achieve better results for all of their patients through the alignment of professional incentives with patient-focused quality and elimination of system redundancy. Valid, meaningful quality and costs measures will support provider accountability, which can also lead to informed and confident patient care choices.

Structuring an ACO: Key Design Features

ACOs can take various configurations, but regardless of specific organizational form, the ACO model has several key design features:

• Local accountability: ACOs must aim to be accountable to their patients and the community they serve. They should also strive to improve patient health and overall care and reduce costs for their patients and community.
• Legal structure: ACOs must have a formal legal structure with a governing board responsible for measuring and improving performance.
• Primary care focus: ACOs must be established on a strong foundation of primary care to impact care at the patient level. The patient population for which an ACO is accountable must be selected based on patients’ use of outpatient evaluation and management services, with primary care giventhe highest priority.
• Sufficient size in patient populations: ACOs must have a sufficient number of patients to ensure that quality and cost impacts at the patient level can be reliably benchmarked and evaluated.
• Investment in delivery system improvements: ACOs must implement meaningful and identifiable reforms in care delivery, patient engagement, and other aspects of health care that will credibly improve health and costs.
• Shared savings: ACOs must offer a realistic and achievable opportunity for providers to share in the savings created from delivering higher-value care. The incentive system must reward providers for delivering efficient care as opposed to the current volume-driven system.
• Performance measurement: ACOs must participate in ongoing performance measurement that provides meaningful evidence of health and cost impacts. Results must be transparent and accessible by patients.

ACO Models for Practice Consideration

Level 1: “One-sided” or Asymmetric Model

In a one-sided or asymmetric model, physician practices can continue operating under current insurance contracts and coverage models (eg, FFS reimbursement). There is limited to no experience necessary with an alternative to FFS payments. During the first 2 years, provider groups have no risk for losses if spending exceeds budget benchmarks. They receive a relatively modest percentage of any earned savings due to limited risk. This model presents the most incremental approach with the least barriers to entry. There are minimal requirements for health IT infrastructure and governance structure. This model is very attractive to new entities, risk-adverse providers, or entities with limited organizational capacity or experience coordinating care across providers.

Level 2: “Two-sided” or Symmetric Model

With this model, physician payments are still predominantly FFS, but they may include some alternative systems such as bundled payments. From inception, provider groups are at risk for losses if spending exceeds the projected benchmark. However, there is an increased incentive for providers to decrease costs due to risk of losses. Provider groups receive a higher percentage of any earned shared savings in line with said increased risk. This is attractive to providers with some health IT infrastructure, care coordination capability, and demonstrated track record managing care.

Level 3: Partial Capitation Model

The last model—Partial Capitation—gives provider groups a mix of FFS and prospective fixed payment. Provider groups share the costs if expenditures exceed the projected benchmarks; they may even have the first dollar risk under a global budget model. If groups are successful at meeting the budget and performance targets, there are greater financial incentives. If the ACO exceeds its target, more risk creates a greater financial downside. This model is only appropriate for providers with robust health in their IT infrastructure and a demonstrated track record in finances and quality. Practices that use this model need to comply with state regulatory oversight to take on the financial risk.

ACOs have great latitude in their structure, participation, and governance and are likely to be geographically unique. Therefore, specialist physicians must be “at the table” for ACO discussions both to add value to the discussions and to protect their interests. A firm understanding of roles and ACO models will ensure that a practice can take part in the discussion.

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Randal J. Roat, CHBME, is the vice president of radiology services with Medical Management Professionals Inc (MMP).