The era of accountable care

The guiding principle behind accountable care organizations (ACOs) is a simple one: Coordinate health services to maximize efficiency and facilitate better patient outcomes. Providers would be paid for the results they produce, not simply for the care they provide.

Over the years, these coordinating groups of practices have gone by many names, but it wasn’t until the reforms of the Affordable Care Act that ACOs began to take their present form, focusing on meeting new patient satisfaction benchmarks and reducing the financial burden caused by patients receiving unnecessary services. While the hype for ACOs promised better care quality and increased revenue, the reality of ACO launches has seen mixed results. Health Management Technology asks two industry experts for their views on the present and future of the accountable care model, now that ACOs have become a reality.

Keegan Bailey, Vice President,
Collaborative Care Strategy, Mirth

Q: The goal of any ACO is to lower costs while improving the quality of care. Most still seem to use the fee-for-service pay model, but the hope is that by better coordinating a patient’s care and avoiding unnecessary treatment, revenues would inevitably increase. In your opinion, why then are many providers seeing a reduction in profits after they adopt an accountable care model?

I think you answered the question. The reality is that this thing we call “value-based health,” or healthcare, is the end, and there is a transition where “value” is the measurement of outcomes that matter over true costs. If you sum all commercial and public payer reimbursement for a healthcare organization, there is a significant portion that is still fee-for-service. Granted, the rate at which value-like contracts are entering the business of healthcare is increasing – in particular in the last six to 12 months. As two examples, the federal government announced earlier this year the goal of tying 30 percent of Medicare payments to quality and value by 2016, and 50 percent of payments by 2018. The private sector followed with a similar commitment. Therefore, many organizations are faced with operating both value-based and fee-for-service contracts, and will be for some time.

The reimbursement models are also at odds with each other. Fee-for-service requires a focus on efficiency and volume, where value-based models require a significant investment in time and resources. However, the difference between an organization succeeding and failing at balancing the two models is proficiency in data and resource allocation [and] reallocation. It is not sufficient to focus just on outcomes or just on system efficiency – success is achieved through a commitment to both.

 Q: For ACOs that are struggling, is there evidence that patients are, on average, at least receiving better care? Are patients more satisfied, and is that aspect of the Meaningful Use requirements being better demonstrated?

The jury is still out, and here is why: The definition of satisfaction and what “better care” means is evolving in the market. Traditionally, there are organizations like AHRQ (Agency for Healthcare Research and Quality) and NCQA (National Committee for Quality Assurance) that have created institutions around surveying patients and reporting the results to healthcare organizations. The same organizations promulgate quality measures that are intended to measure whether “better care” is delivered. Both the surveys and quality measures are present in both commercial and public ACO contracts and requirements, but they do not measure what they intend to measure.

By focusing on process components of the care, or derivative elements of satisfaction – i.e. whether an HbA1c test was performed and whether a provider shared the results with the patient – what actually matters to the patient is missed completely. A true outcome, like improved daily function and lifestyle if you are diabetic, [is often overlooked]. Whether patients are receiving better care or not will be a difficult question to answer until true outcomes become a focus of most or all value-driven organizations in healthcare.

Q: We have seen mixed reports regarding the adoption of technology by ACO groups. Does having an organization made up of coordinating providers make it easier or more difficult for them to all be on the same page when it comes to adopting the latest tech?

An ACO is any value-driven organization that has cared enough to take a look inward and assess their business, rather than simply responding to external requirements and stimulus that have traditionally come from payers. These are advanced health systems – loosely defined – that could be hospital-centric, provider-centric, or another combination of stakeholders. Whichever organization is leading value-initiatives should spearhead the investment and adoption of significant infrastructure to connect their provider community.

Our experience is that technology implemented with the appropriate leadership, governance, and expertise – technology such as a central data repository, enterprise data warehouse, and care and chronic disease management tools – will succeed at enhancing care continuity and coordination within the health system and with its trading partners.

Q: In what ways can ACO regulations be improved to promote better care while also assuring practices aren’t bogged down in extra layers of bureaucracy?

Anecdotally, they have already, but there is a lot more work to be done. In December 2014, CMS published a Notice of Proposed Rulemaking governing CMS ACOs. Many industry comments that were received were an accumulation of experiences in the program over the last four-plus years, and urged CMS to enhance the program to promote better care and reduce red tape.

[Recently], CMS demonstrated their attentiveness to some of those comments by announcing the publishing of an ACO Final Rule in the Federal Register on Tuesday, June 9. Some provisions include: making the program more attractive to new contractors, a new Track 3 with higher rates of shared savings, and the opportunity to use new care-coordination tools, making it easier to access claims data. … CMS estimates that the impact of these changes would provide an additional $240 million in program savings, bringing the total to $780 million.

Tom Merrill,
Senior Analyst,
Leavitt Partners

Q: For those ACOs that are seeing improvements on both the revenue side and patient care, is there a common trend in terms of the approach they’re taking?

Amongst ACO types, there may be shared approaches that are working, but probably not across the board. For example, hospitals are benefiting patients by helping them avoid unnecessary readmissions, but it’s hurting their revenue.  When physician-only ACOs help patients avoid readmissions, they get to share in revenue that wouldn’t have been theirs prior to the ACO contract.

The approach that is leading to improvements on both sides are the groups that are able to take on full risk and benefit from lower-volume/lower-cost structure. … Irrespective of revenue issues, most ACOs are building care-coordination teams usually comprised of nurses, PAs, and/or other lower-cost providers. Most are purchasing some sort of analytics solution that allows them to stratify their populations into the most needy and focus their efforts.

Q: Some have suggested that having one organization manage all the care of a patient is detrimental to the patients’ individual freedom by limiting choice. How do we avoid a situation where the adoption of ACOs doesn’t cause a serious market convergence?

I think you make it so the consumer is making an informed choice. No patient in their right mind would demand an all-inclusive network if it meant that the premium was unaffordable. If the payer/provider can demonstrate what a consumer will get under an affordable product, the market will respond.

Q: A lot of organizations that use the “accountable care” label are resisting the adoption of the more “official” MSSP  (Medicare Shared Savings Program) model. Why do you think that is? After all, most ACOs have goals in-line with government requirements.

A few reasons. The government programs are very proscriptive and can represent a lot of work just to apply to a program like the MSSP, Pioneer, or Next Generation ACO program. Depending on the market, providers can demand a lot of flexibility in their contracts from their commercial payers. That’s not the case with Medicare. With the MSSP [and the rest of the government ACO programs], it’s either take it or leave it. The other reason is that commercial contracts are much more likely to have risk be optional, whereas CMS has the incentive to move ACOs to downside risk as soon as possible – although they just capitulated on that with the Final Rule.

Q: Is the future for ACOs a bright one?

I believe the future is bright for the ACO concept and those providers bold enough to jump in and push the market toward a more accountable system. Terms will fade or change, models will be modified, but the idea of paying providers for outcomes will not go away. Results so far have been modest, mostly because the restructuring has been modest. Greater distribution of risk will lead to larger restructuring in the way we provide care. That is when we will truly see results.

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