ACOs: The Models, the Reality
A familiar saying has been applied to accountable care organizations. They're like unicorns: "Everybody knows exactly what [ACOs] look like, but no one has ever seen one," says Barry Bershow, MD, of Bershow Consulting, in Chanhassen, Minn.
Is the vision for ACOs any clearer now that the Centers for Medicare & Medicaid Services (CMS) has made public in its proposed guidelines for accountable care organizations? CMIO asked early adopters of pay-for-performance strategies to assess ACOs' chances for success. Their take? Three years won't be a long enough time to realize savings through shared costs. They also wonder if the proposed framework is different (or disruptive) enough to transform care. Nevertheless, it's a start.
The rules, among the provisions of section 3022 of the Patient Protection & Affordable Care Act (PPACA) Shared Savings Program, seek to establish a regulatory framework to transition healthcare from pay for volume to pay for performance.
Under the Shared Savings Program, subject to requirements concerning monitoring avoidance of at-risk patients, Medicare will continue to reimburse providers of services and suppliers participating in an ACO under the original Medicare FFS program under Parts A and B in the same manner as they would otherwise be made, except that a participating ACO is eligible to receive payment for shared savings if:
Under the Shared Savings Program, ACOs will only share in savings if they first generate sharable savings and then meet the quality standards. The ACO is accountable for the quality, cost and overall care of the Medicare fee-for-service (FFS) beneficiaries assigned to it. Partners in the ACO must agree to participate in the program for not less than a three-year period, and the organization is then assessed for quality improvement and realized cost savings.
Shared savings were minimal to nonexistent for several reasons, says co-author Keith Kosel, PhD, MBA, MHSA, senior director for research, Clinical Improvement Services at VHA, an Irving, Texas-based network of 1,400 not-for-profit hospitals and more than 24,000 non-acute care organizations nationwide.
"For one thing, the time period was fairly short. Most of these integration initiatives look like they are going to take anywhere from three to seven to 10 years, depending on how well-prepared these organizations are," Kosel says.
The organizations in the PGP demonstration already had many of the prerequisites necessary for ACO status, but that didn't ensure success. "Without those prerequisites, organizations are going to be at a real disadvantage [in trying] to get things to work correctly—specifically the communications, transitions and handoffs," he explains. "That's the big hurdle to overcome."
In addition, ACOs require a culture change, and executive leadership and medical leadership must be on board. "The concepts are hard to argue with, but the structure and the details of the current ACO model have some major drawbacks that go along with the upside," he says.
"In concept, it's pretty straightforward: 'it's this many dollars, doctors and hospitals, and all the ancillary providers work together [and] share information.' But in reality, that's not how the healthcare system works," Kosel says.
Is the CMS actually moving the U.S. away from a fee-for-service model? "Conceptually that's the goal, simply because we can't financially support a fee for service model that rewards volume versus value," says Kosel.
"If you are looking at ACOs for very rapid cost savings, you are going about it the wrong way," agrees Bershow, former vice president of quality at Fairview Medical Group, in Minneapolis. During his tenure, Fairview adopted a pay-for-performance care model.
Cost-saving measures will come when organizations develop shared decision-making, clinical decision support and good data mined well to help doctors measure their performance, he says. "Everybody should concentrate on quality and the delivery of the patient experience first and let the cost savings come when they come."
For example, at Fairview, "we had a preliminary model where we showed a tracking over about 15 months of 3.7 percent cost of care increase compared to our standard clinics that were going up at about 14 percent," he says. "[In] a well-organized ACO that's built around healthcare homes, that's built around good team-based care, you are going to see those savings—even in an institution like ours that already had pretty good quality and cost compared to most places in the country."
He predicts a gradual transition away from fee for service, beginning with things like bundled payment models or very limited risk sharing in the short term. "When I say short term, I'm saying probably the next two to three years, with more aggressive risk-sharing arrangements possible in that time period for some organizations in the form of demonstrations or pilot programs offered through the Center for Medicare and Medicaid Innovation," Kosel says.
The basics of chronic condition management—proactively outreaching to members with high-volume, chronic conditions (e.g., diabetes, heart failure and asthma) in an effort to help them better manage their conditions and avoid unnecessary healthcare costs such as ED visits and hospitalizations—will probably be an initial focus of ACOs, says Barbara Gray, MBA, RN, vice president of the Accountable Care Collaborative at Premier healthcare alliance, a Charlotte, N.C.-based organization of more than 2,500 U.S. hospitals and 73,000 additional healthcare sites. Premier's Accountable Care Collaborative works with its members to develop accountable care capabilities.
"The skyrocketing costs of chronic condition management, and their preventable nature, make them well-suited to a team-based approach in a medical/health home, which will include a focus on reducing risk factors such as smoking, poor diet, lack of exercise and depression," says Gray.
Craig Samitt, MD, president and CEO of Dean Clinic, in Madison, Wis., agrees. "A lot of the trends that have motivated the need for reform have been somewhat longstanding—the need to improve patient satisfaction with healthcare delivery, the rapidly escalating cost, the opportunity for us to improve quality and the need for standardization and implementation of evidence-based guidelines."
Dean began to transform its physician group into an integrated healthcare delivery system several years ago, he says. The opportunity and the challenge was that "Dean lived in a schizophrenic world from a payor perspective," Samitt says. "Half of our revenues came from our own provider-sponsored health plan, which we co-own with SSM Health Care, and the other half of our revenues came from fee-for-service payors, including Medicare."
As a result, Dean providers were rewarded from their fee-for-service payors for more hospitalizations, more procedures, more testing and more imaging, which was "a very sickness-focused orientation," he says. "Yet our own health plan rewarded us for being accountable, e.g. by focusing on primary care, wellness/prevention, avoidance of hospitalizations, readmissions and reduction of waste."
Dean had three choices, according to Samitt: "One, we could live fully in the volume-based world that our fee-for-service payors were rewarding us for. The second choice was to live purely in the value-based accountable world that our health plan was rewarding us for and … where our patients wanted us to go," he says. "The third—which we would do under no circumstance—was a blended model where we asked our doctors to practice two different types of medicine, depending on who the patient's insurer was. … We picked the value path, and we picked that route long before the words 'accountable care' had even been uttered."
The implications of that choice were significant because it required a paradigm shift in the way that Dean delivered care. "It's a shift from volume to value, it's a shift from sickness to prevention, it's a shift from revenue maximization to waste/error reduction. And it's a shift from the delivery of more care to the delivery of better care," says Samitt.
Gray has identified six target markets for ACO-type partnerships beyond the Medicare market. A number of health plans are contracting with health systems, physician-led groups, physician-hospital organizations and other provider organizations to deliver accountable care with a shared savings model, says Gray. "We also are seeing a number of our members who are starting [by] applying accountable care principles to their own employee population. And we have some members who are contracting directly with large self-funded employers in their market and applying aspects of accountable care." She cites AtlantiCare in New Jersey, which has developed a "special care clinic" around chronic condition management. Other markets include Medicaid, individuals and the uninsured.
Strength through partnerships is going to be an essential part of a successful organization's team approach, according to Gray. "For organizations, [viable] integrated delivery will have to focus on value versus volume, and concentrate on improving quality, reducing unnecessary costs and enhancing the member experience. They are going to have to be very good at partnering—with payors, with their provider network, and I think first of all, with their primary care physicians."
Likewise, "the providers are going to have to partner in a different way. They need to partner with their members/patients," she says. "For this to be workable, members have to accept responsibility as well. You really have to have a new sense of partnership across different members."
Systems integration is a big barrier, according to Gray. "Some organizations are looking to health information exchanges [HIEs] to address that. There are other organizations—Premier is one of them—developing a system whereby we will be able to accept and report on data from virtually any organization, whether it's a payor or a provider or an ancillary service provider such as a laboratory.
Even without tight integration, however, "there are still opportunities to move toward value versus volume," she says. For example, care coordination via simple handoffs can occur even without full data integration. "Even identifying patients who are discharged from a hospital, and following up with them within 24 hours to ensure that they have an appointment with their physician, that's huge. You don't necessarily have to have an interoperable EHR to do that," says Gray.
"I think there are a number of things that can be done in the absence of data sophistication, and I think that's where a number of the organizations are starting. Coordination across care sites is essential to improving outcomes, reducing costs and delivering a positive patient experience."
In spite of the uncertainty, organizations would do well to start the ACO process now, Gray says. "I think what's important is that you prepare early and not wait, because when accountable care becomes more of the norm versus the exception, you can't turn these capabilities on like a light switch. Because we are talking major re-engineering and major change of perspective."
Is the vision for ACOs any clearer now that the Centers for Medicare & Medicaid Services (CMS) has made public in its proposed guidelines for accountable care organizations? CMIO asked early adopters of pay-for-performance strategies to assess ACOs' chances for success. Their take? Three years won't be a long enough time to realize savings through shared costs. They also wonder if the proposed framework is different (or disruptive) enough to transform care. Nevertheless, it's a start.
The rules, among the provisions of section 3022 of the Patient Protection & Affordable Care Act (PPACA) Shared Savings Program, seek to establish a regulatory framework to transition healthcare from pay for volume to pay for performance.
Under the Shared Savings Program, subject to requirements concerning monitoring avoidance of at-risk patients, Medicare will continue to reimburse providers of services and suppliers participating in an ACO under the original Medicare FFS program under Parts A and B in the same manner as they would otherwise be made, except that a participating ACO is eligible to receive payment for shared savings if:
- The ACO meets quality performance standards established by the secretary of Health and Human Services; and
- The ACO meets the requirements for realizing savings.
Under the Shared Savings Program, ACOs will only share in savings if they first generate sharable savings and then meet the quality standards. The ACO is accountable for the quality, cost and overall care of the Medicare fee-for-service (FFS) beneficiaries assigned to it. Partners in the ACO must agree to participate in the program for not less than a three-year period, and the organization is then assessed for quality improvement and realized cost savings.
 | |
| In this organizational model, the PCP and a networked care team operating in a “health home” are the central point of contact for people in the ACO. A range of care providers also are included in the organization. Source: Premier Inc. | |
Not so fast
An online Perspective in the New England Journal of Medicine in March predicted that ACOs won't save money in that three-year time period. The authors reached their conclusions using data from CMS' Physician Group Practice (PGP) Demonstration Project, which ran from 2005 to 2010, and was used as the primary basis for the current ACO model.Shared savings were minimal to nonexistent for several reasons, says co-author Keith Kosel, PhD, MBA, MHSA, senior director for research, Clinical Improvement Services at VHA, an Irving, Texas-based network of 1,400 not-for-profit hospitals and more than 24,000 non-acute care organizations nationwide.
"For one thing, the time period was fairly short. Most of these integration initiatives look like they are going to take anywhere from three to seven to 10 years, depending on how well-prepared these organizations are," Kosel says.
The organizations in the PGP demonstration already had many of the prerequisites necessary for ACO status, but that didn't ensure success. "Without those prerequisites, organizations are going to be at a real disadvantage [in trying] to get things to work correctly—specifically the communications, transitions and handoffs," he explains. "That's the big hurdle to overcome."
In addition, ACOs require a culture change, and executive leadership and medical leadership must be on board. "The concepts are hard to argue with, but the structure and the details of the current ACO model have some major drawbacks that go along with the upside," he says.
"In concept, it's pretty straightforward: 'it's this many dollars, doctors and hospitals, and all the ancillary providers work together [and] share information.' But in reality, that's not how the healthcare system works," Kosel says.
Is the CMS actually moving the U.S. away from a fee-for-service model? "Conceptually that's the goal, simply because we can't financially support a fee for service model that rewards volume versus value," says Kosel.
"If you are looking at ACOs for very rapid cost savings, you are going about it the wrong way," agrees Bershow, former vice president of quality at Fairview Medical Group, in Minneapolis. During his tenure, Fairview adopted a pay-for-performance care model.
Cost-saving measures will come when organizations develop shared decision-making, clinical decision support and good data mined well to help doctors measure their performance, he says. "Everybody should concentrate on quality and the delivery of the patient experience first and let the cost savings come when they come."
For example, at Fairview, "we had a preliminary model where we showed a tracking over about 15 months of 3.7 percent cost of care increase compared to our standard clinics that were going up at about 14 percent," he says. "[In] a well-organized ACO that's built around healthcare homes, that's built around good team-based care, you are going to see those savings—even in an institution like ours that already had pretty good quality and cost compared to most places in the country."
Where to begin?
"If it's not going to be fee-for-service, what's it going to be? We have tried capitated models in the past, and those had mixed results. And the patient populations that had been tied to them have had mixed assessments as well," says Kosel.He predicts a gradual transition away from fee for service, beginning with things like bundled payment models or very limited risk sharing in the short term. "When I say short term, I'm saying probably the next two to three years, with more aggressive risk-sharing arrangements possible in that time period for some organizations in the form of demonstrations or pilot programs offered through the Center for Medicare and Medicaid Innovation," Kosel says.
The basics of chronic condition management—proactively outreaching to members with high-volume, chronic conditions (e.g., diabetes, heart failure and asthma) in an effort to help them better manage their conditions and avoid unnecessary healthcare costs such as ED visits and hospitalizations—will probably be an initial focus of ACOs, says Barbara Gray, MBA, RN, vice president of the Accountable Care Collaborative at Premier healthcare alliance, a Charlotte, N.C.-based organization of more than 2,500 U.S. hospitals and 73,000 additional healthcare sites. Premier's Accountable Care Collaborative works with its members to develop accountable care capabilities.
"The skyrocketing costs of chronic condition management, and their preventable nature, make them well-suited to a team-based approach in a medical/health home, which will include a focus on reducing risk factors such as smoking, poor diet, lack of exercise and depression," says Gray.
Craig Samitt, MD, president and CEO of Dean Clinic, in Madison, Wis., agrees. "A lot of the trends that have motivated the need for reform have been somewhat longstanding—the need to improve patient satisfaction with healthcare delivery, the rapidly escalating cost, the opportunity for us to improve quality and the need for standardization and implementation of evidence-based guidelines."
Dean began to transform its physician group into an integrated healthcare delivery system several years ago, he says. The opportunity and the challenge was that "Dean lived in a schizophrenic world from a payor perspective," Samitt says. "Half of our revenues came from our own provider-sponsored health plan, which we co-own with SSM Health Care, and the other half of our revenues came from fee-for-service payors, including Medicare."
As a result, Dean providers were rewarded from their fee-for-service payors for more hospitalizations, more procedures, more testing and more imaging, which was "a very sickness-focused orientation," he says. "Yet our own health plan rewarded us for being accountable, e.g. by focusing on primary care, wellness/prevention, avoidance of hospitalizations, readmissions and reduction of waste."
Dean had three choices, according to Samitt: "One, we could live fully in the volume-based world that our fee-for-service payors were rewarding us for. The second choice was to live purely in the value-based accountable world that our health plan was rewarding us for and … where our patients wanted us to go," he says. "The third—which we would do under no circumstance—was a blended model where we asked our doctors to practice two different types of medicine, depending on who the patient's insurer was. … We picked the value path, and we picked that route long before the words 'accountable care' had even been uttered."
The implications of that choice were significant because it required a paradigm shift in the way that Dean delivered care. "It's a shift from volume to value, it's a shift from sickness to prevention, it's a shift from revenue maximization to waste/error reduction. And it's a shift from the delivery of more care to the delivery of better care," says Samitt.
Gray has identified six target markets for ACO-type partnerships beyond the Medicare market. A number of health plans are contracting with health systems, physician-led groups, physician-hospital organizations and other provider organizations to deliver accountable care with a shared savings model, says Gray. "We also are seeing a number of our members who are starting [by] applying accountable care principles to their own employee population. And we have some members who are contracting directly with large self-funded employers in their market and applying aspects of accountable care." She cites AtlantiCare in New Jersey, which has developed a "special care clinic" around chronic condition management. Other markets include Medicaid, individuals and the uninsured.
Strength through partnerships is going to be an essential part of a successful organization's team approach, according to Gray. "For organizations, [viable] integrated delivery will have to focus on value versus volume, and concentrate on improving quality, reducing unnecessary costs and enhancing the member experience. They are going to have to be very good at partnering—with payors, with their provider network, and I think first of all, with their primary care physicians."
Likewise, "the providers are going to have to partner in a different way. They need to partner with their members/patients," she says. "For this to be workable, members have to accept responsibility as well. You really have to have a new sense of partnership across different members."
Systems integration is a big barrier, according to Gray. "Some organizations are looking to health information exchanges [HIEs] to address that. There are other organizations—Premier is one of them—developing a system whereby we will be able to accept and report on data from virtually any organization, whether it's a payor or a provider or an ancillary service provider such as a laboratory.
Even without tight integration, however, "there are still opportunities to move toward value versus volume," she says. For example, care coordination via simple handoffs can occur even without full data integration. "Even identifying patients who are discharged from a hospital, and following up with them within 24 hours to ensure that they have an appointment with their physician, that's huge. You don't necessarily have to have an interoperable EHR to do that," says Gray.
"I think there are a number of things that can be done in the absence of data sophistication, and I think that's where a number of the organizations are starting. Coordination across care sites is essential to improving outcomes, reducing costs and delivering a positive patient experience."
In spite of the uncertainty, organizations would do well to start the ACO process now, Gray says. "I think what's important is that you prepare early and not wait, because when accountable care becomes more of the norm versus the exception, you can't turn these capabilities on like a light switch. Because we are talking major re-engineering and major change of perspective."