Understanding Accountable Care Organizations as a Model for Patient Access to Care in the Era of Healthcare Reform
What is an ACO and how did this concept develop?
With the passage of healthcare reform legislation in March 2010, the Medicare program received authorization to contract with entities called accountable care organizations (ACOs). Comprised in the form of a network, ACOs are organized groups of physicians, hospitals, or other healthcare providers who share the responsibility of managing the full continuum of access to care to a defined patient population.1,2,3
The concept of ACOs was initially reviewed during a Medicare Payment Advisory Board Committee Meeting in 2006, but it wasn't until the passage of the Patient Protection and Affordable Care Act of 2010 (PPACA) that the national discussion on ACOs picked up again.1 With an ongoing focus on initiatives that may reduce the national deficit, lawmakers have identified the Medicare program as one such area to minimize wasteful spending.4 Under PPACA, Congress established the "Medicare shared savings program" to develop the ACO model for traditional fee-for-service Medicare beneficiaries. According to estimates from the Congressional Budget Office (CBO), by 2019 ACOs are expected to lead to $4.9 billion in savings for the Medicare program.3,4
Promoting integrated healthcare service delivery, the ACO model is intended to improve healthcare quality, coordination, and efficiency. To achieve this, the fundamental theory behind the concept of ACOs is that effective delivery of coordinated care must be conducted by integrating the providers who deliver patient care. For example, under the ACO model, healthcare providers would need to seamlessly share patient information across various points of care, as well as, coordinate testing and procedures to avoid redundancies.2,4
At this time, the precise definition of ACOs is still evolving, as are the details on how to translate the theory of ACOs into implementation. Over the course of 2011, the Centers for Medicare & Medicaid Services (CMS), is expected to release regulations with more information on ACO implementation.1,3,4 In the meantime, in the healthcare community, a number of preliminary requisites and guidelines have been drafted for developing an effective ACO model, including the following considerations outlined by the California Health Care Foundation and iterated by the American Medical Association:1
- A shared strategic vision that identifies the longer-term goals of the ACO within the context of community health needs, provider capabilities, and state and federal health policy
- An organizational structure that supports the ACO's strategy through shared hospital-physician leadership; transparent decision making; and clarity surrounding participants' roles
- Alignment of provider financial incentives consistent with the ACO's strategic goals and addressing the issues of cost, access, quality, and choice
- Appropriate clinical and organizational infrastructure, including coordination of medical care, financial systems, and information technologies
- Sufficient capital and clinical/financial management capabilities to support the assumption of risk, and a plan to transition from lower-risk payment models, such as shared savings, to higher-risk models, such as partial or complete capitation
- Trusting, respectful relationships among ACO participants, and clear channels of communication
Overall, the ACO model is expected to align networks of specialists, ancillary providers, and hospitals with a focus on patient care integration, coordination, and outcomes.
Who is eligible to form an ACO and what would an ACO structure look like?
To participate in the Medicare program for the ACO initiative, eligible entities include group practices, independent practice associations or other networks of individual practitioners, partnerships of hospitals and professionals, hospitals that employ professionals, and other groups defined by the US Department of Health & Human Services (HHS).2 A number of healthcare providers have expressed concern to HHS that ACO networks could potentially be dominated by hospitals and therefore drive out small and independent group practices from participation. In response, the HHS has clarified, that under PPACA legislation, ACOs can be formed without involvement from hospitals.5
Currently, across the entities eligible to participate, the five general ACO structures that are being explored include the following:1
- Multi-specialty group practice model
- Hospital medical staff organization
- Physician Hospital Organization (PHO)
- Interdependent Practice Organization (IPA), and,
- Health plan-provider organization
What are the operational details of ACOs?
Under the timeline of healthcare reform, the ACO initiative is scheduled to launch in January 2012, although many healthcare providers have started planning to form ACOs, both for Medicare beneficiaries as well as for patients with private insurance.2,4
Within the Medicare program, an ACO network must agree to a three-year contract as well as have a sufficient number of primary care providers to be able to provide care to at least 5,000 Medicare beneficiaries. Such requirements have been set up to ensure that a large enough sample size and engagement time will yield meaningful performance measurements.1,2,3
In addition, ACOs must develop a leadership and management structure for clinical and administrative functions, establish protocols and processes that promote evidence-based medicine and patient engagement, report on quality and cost measures, as well as, demonstrate patient-centered and coordinated care. ACOs will also need to create a formal legal structure that manages receipt of shared savings payments as well as distribution of those payments across healthcare providers.1,3
What is the impact of the ACO model for Medicare patients?
Based on how the law is currently written, there is no provision that specifies how Medicare beneficiaries will be assigned to an ACO. In fact, patients may not even know that they are part of an ACO network or be formally involved in an enrollment process, at least at the outset of the ACO initiative. While healthcare providers will look to defer Medicare patients to hospitals and specialists within their ACO network, patients are free to seek care from non-ACO healthcare providers. What is expected to impact patients however, is the receipt of better coordinated, more streamlined, and improved quality of care.2,4
What are the challenges with ACOs?
With the growing interest and trend to form ACOs, healthcare economists predict that one significant downside could be an increase in hospital mergers and provider consolidation, leading to fewer small and independent group practices.4
Healthcare providers and industry leaders have also expressed concern with legal implications and risks associated with ACOs, in particular from antitrust and anti-fraud laws.1,4
Organizations considering joining an ACO may experience upfront challenges such as internal resistance to change, developing and financing the business case for change, productivity and interruptions to work flow, as well as establishing sustainable infrastructure for this initiative.3
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While ACOs have become a hot trend in the healthcare community over the past year, organizations considering forming or joining an ACO network should become fully equipped and familiarized with the information available to evaluate participation in the ACO initiative.
For more information on ACOs, please review the following resources.
References:
1http://www.ama-assn.org/ama1/pub/upload/mm/368/physician-how-to-manual.pdf#page=10
2 http://www.healthaffairs.org/healthpolicybriefs/brief.php?brief_id=23
3 http://www.nihcr.org/Accountable-Care-Organizations.pdf
4http://www.kaiserhealthnews.org/Stories/2011/January/13/ACO-accountable-care-organization-FAQ.aspx
5 http://www.fiercehealthcare.com/story/sebelius-acos-can-be-hospital-free/2011-02-18
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