From a technology standpoint, EHRs, CPOE, and decision support tools will play a major role as ACOs gain momentum.

Steven Gerst, MD, MBA, MPH, CHE

More than likely, ACOs of various forms are here to stay. They are the most politically acceptable mechanism to change financial incentives from maximizing hospital and physician practice revenues under discounted fee-for-service payments to episode of care based “bundled payments” and capitation. In this new scenario, commercial health insurers will calculate the cost per patient on a “per member per month” (capitated) basis and offer to pay the ACO this rate or lower.

If the ACO is a hospital-sponsored entity, IPA, Medicare Advantage, or Managed Medicaid plan, the ACO assumes the insurer’s risk. The ACO must then contract, employ, and manage the contracted or employed physicians to provide comprehensive patient care at a total cost less than the capitation rate. Approximately 74% of care is currently provided in California under this type of capitated model.

If the total ACO costs are less than the contracted capitation rate, either the ACO will retain those savings as profit, or may share the savings with the insurer under a “gain-sharing arrangement.” This is the same design of the Medicare Shared Savings Program under the Patient Protection and Affordable Care Act (PPACA of 2010). As ACOs develop, Medicaid managed care plans and commercial insurers are likely to employ similar contracting methods.

To generate these savings, more efficient electronic practice management tools will need to be employed by ACOs. The electronic medical record (EMR) and ACO capitation management systems will form the core technology management platforms. Clinical decision support, e-referral systems, and predictive modeling tools are likely to be added to these core systems, creating actionable items to help improve care quality and reduce costs.

Advanced imaging clinical decision support systems (especially for radiology, cardiology, emergency medicine, and pediatrics) providing evidence-based guidance at the Point of Ordering will likely be the first and most critical component of the intelligent medical information highway. These modular systems will seamlessly integrate with the EMR through the CPOE to identify the most medically appropriate tests based on the patient’s medical history using established criteria from the American College of Radiology (ACR), the American College of Cardiology (ACC), and other associations.

Clinical decision support replaces the cumbersome and contentious utilization review process, which studies have indicated can cost the average physician practice $68,274 per year in physician, nurse, and clerical staff time1 to interact with health plans, now totaling $21 to $31 billion per year.2

In addition, for hospitals, ACOs, and capitated physician practices with high Medicare and capitated Medicaid programs, reducing unnecessary or inappropriate tests can save millions of dollars, improve patient care, and reduce unnecessary overexposure to ionizing radiation,3 length of stay, adverse events, and readmission rates, while reducing medical errors reported to cost the United States $37 billion per year.4

In fact, the proposed new ACO rules published by CMS on March 31, 2011, propose that at least 50% of an ACO’s primary care physicians be meaningful EHR users by the start of the second year of the Medicare Shared Savings Program to continue participation in the program. Under these new rules, “an ACO would be expected to develop and implement evidence-based best practices ? [and] provide information to influence care at the point of care via, for example, shared clinical decision support.”5 Of the 65 proposed “quality metrics” for ACOs, the five applying to the HITECH Act and Meaningful Use include the percentage of ACO providers using clinical decision support.

EMR-based clinical decision support is likely to become a highly cost-effective, integral part of workflow through Health Information Exchanges (HIEs). As recommended by the HHS ONC HIT Work Group, it is expected that Stage 2 of “Meaningful Use” regulations would include 60% of diagnostic imaging orders be placed through the CPOE with 80% under Stage 3.6 When combined with CPOE usage under Stage 2 of Meaningful Use, clinical decision support at the point of ordering will provide substantial added value to achieve both the required quality measures and cost savings.

Since studies have indicated that perhaps 20% to 50% of advanced diagnostic imaging tests may be medically unnecessary or inappropriate,7 costing $3 to $10 billion annually8 and another $20 billion in duplicate tests,9 the new economics of ACOs could have significant impact on the economics of future radiology practices, especially for those practices that are subcontracted to a hospital or ACO. Therefore, to control the radiologist’s economic destiny, leaders should be involved in the process of selecting a clinical decision support system that provides the flexibility for the radiologist to author and maintain the local rules set and become part of the process rather than allow the ACO to impose rules. This flexibility will be critical to future economic success and survival.

Steven Gerst, MD, MBA, MPH, CHE, is vice president of Medical Affairs at MedCurrent Corporation.

  1. Casalino LP, Nicholson S, Gans DN, Hammons T, Morra D., Karrison D., and Levinson W. (2009, May 14). What does it cost physician practices to interact with health insurance plans? Health Affairs Web Exclusive, May 14, 2009, w533?w543.
  2. Ibid.
  3. Reporting accumulated dosage and patient exposure is now a law in California starting in 2012 (Senate Bill 38 – 2011-2012).
  4. Institute of Medicine. 2009 Institute of Medicine workshop series: lowering costs and improving outcomes. Washington, DC: National Academies Press.
  5. Federal Register. (2011, March 31). As retrieved from:
  6. Tang, P., Hripcsak.,G. (2010, December). The Department of Health and Human Services’ Office of National Coordination of Health Information Technology Report of December 13, 2010.
  7. America’s Health Insurance Plans. (2008) . Ensuring quality through appropriate Use of diagnostic Imaging. As retrieved from:
  8. Stein C. Code red partners program aims to rein in skyrocketing costs of diagnostic imaging. Boston Globe. June 27, 2003 and Picano E. Sustainability of medial imaging. BMJ. 2004;328:578-580
  9. Mullaney T. This man wants to heal health care. Business Week. October 31, 2005 and Kaplan D. A new way to manage radiology utilization could help limit costs. Managed Healthcare Executive. September 1, 2006. Retrieved 7/23/08 from