Although I’ve alluded to the organizational structure known as the ACO here and posted a link to a really funny video about them here, I’ve never actually made the effort to fully describe the organizational structure or the implications for primary care and primary care training. This was because of fear that I might fall asleep writing about it. This changed after my discussion with Paul Grundy this past week which I spoke of here. Paul encouraged me to look into the structure because he is convinced that it is a mechanism to fund the Patient Centered Medical Home method of care delivery. I tend to believe him because he has been correct so far about “where the puck is going to be.” I will attempt to describe this in such a way that I will not sleep while writing and hopefully you won’t sleep while reading, either. 

Accountable Care Organizations were first described in Health Affairs by Elliot Fischer and others in 2007.  They described an established  pattern to healthcare delivery where physicians tend to use the same “referral networks” either because of formal relationships or informal arrangements. The relationships tended to involve groups of primary care physicians, specialists, and hospitals. These relationships resulted in care that could be characterized on a spectrum with some care being predictably very high quality, some very low quality, and the majority of care delivered in the middle. The question not answered by this research was “whether changes in incentive would result in improved care for all?”. The investigators clearly identified that a level of accountability, organization, and aligning incentives with desired outcomes tended to predict patients getting measurably better care. 

Fast forward to 2010. The Patient Accountability Act is passed and included in it is language that holds CMS responsible for implementing Accountable Care Organizations by January 2012. CMS has identified the following groups as being able to form an ACO:

Who can form an ACO

 A: The statute specifies the following:

1) Physicians and other professionals in group practices

2) Physicians and other professionals in networks of practices

3) Partnerships or joint venture arrangements between hospitals and physicians/professionals

4) Hospitals employing physicians/professionals

5) Other forms that the Secretary of Health and Human Services may determine appropriate.

The American Hospital Association published a summary of what an ACO is believed to be in May 2010. They identify the minimum that is in the law:

ACOs must have a formal legal structure to receive and distribute shared savings to participating providers.  

There must be enough primary care professionals to treat their beneficiary population (minimum of 5,000 beneficiaries) as deemed sufficient by CMS.

Each ACO must agree to at least three years of participation in the program.

Each ACO will have to develop sufficient information about their participating health care professionals to support beneficiary assignment and for the determination of payments for shared savings.     

ACOs will be expected to include a leadership and management structure that includes clinical and administrative systems.     

Each ACO will be expected to have defined processes to promote evidence-based medicine, report on quality and cost measures, and coordinate care.     

ACOs will also be required to produce reports demonstrating the adoption of patient-centered care.     

I must admit I was a little disappointed when I read this summary because it didn’t seem to me that this organizational structure would do anything to reduce the profound overutilization we have in this country and we were in for more of the same. I was more heartened when I read the Health Affairs policy brief published in August 2010. In this brief (worth a read in its entirety) the basic features are fleshed out in much greater detail:  The speculation is that ACOs will be able to qualify in one of three categories  based on willingness to accept risk. The reporting of outcomes will be mandatory but the acceptance of risk for bundled care (for example, treatment of congestive heart failure which involves a primary care doctor, cardiologist, and a hospital) will offer greater reward. 

Basic Features: The version of health reform legislation originally passed by the House would have given the Centers for Medicare and Medicaid Services (CMS) authority to pilot test a variety of different structural and payment approaches for ACOs. The Senate version that was enacted into law focused instead on one model that is now able to become a part of Medicare, not just a pilot program. The model embodies a few basic features proposed by some policy analysts:  

  • Invisible Enrollment. Patients who receive most of their care from ACO-affiliated providers would be treated as “assigned” to the ACO. At least at the outset, they would not be formally enrolled, would not be required to obtain services through the ACO, and might not even know the ACO existed. The assignment process would allow payers to define a population for which the ACO could be held accountable. Critics of this approach believe that patients should have a choice about participating in an arrangement that could reward providers for reducing services.
  • Performance Measurement. Over some period of time, payers would collect data on utilization and costs for the ACO population and on measures of quality of care and population health. A provider could be required to meet minimum quality standards in order to continue to participate in the ACO. In addition, quality reporting requirements would encourage improvements in ACO-wide information systems, a key factor in developing coordinated care.
  • Shared Savings. Spending for the population of patients in a particular ACO could be compared to targets based on past experience for the same patients, or to spending for similar patients in the community who were not assigned to the ACO. If the ACO was found to have saved money, it would receive some share of the savings. Just how the savings would be divided among the participating providers is a major question that each ACO will need to resolve on its own.
  • Evolution Toward Stronger Incentives. In the beginning, there would be no downside risk: The ACO would not share in the losses if treatment of its patients cost more than expected, though this could change over time.

Elliot Fisher (who conceived of the idea) has published another Health Affairs article (subscription required) entitled “A National Strategy to put Accountable Care into Practice.”  where he discusses the types of information that the ability to act will determine which the level risk the organization will be allowed to undertake. For Tier 1, for example, care providers will have to identify numbers of patients who have been screened for easily detectable and treatable cancers to allow prospective patients to compare groups. Tier 2 will be expected to maintain high levels of childhood immunizations, high levels of glucose control in diabetics, and high levels of blood pressure control. Tier 3 will need to control entire episodes of care such as hip replacements, diabetes care and this control will include the patient experience.

So the question comes up…isn’t this just another name for an HMO (which the American public rejected)? Fellow blogger Jason Safrin has put together a comparison. He points out that

However, there are three main differences between ACOs and HMOs.

  1. The “accountability” rests with the providers.  Providers or provider groups, rather than insurance companies, are evaluated on the quality and efficiency of care.
  2. Direct contracting with provider organizations without the reliance on a health plan intermediary.
  3. The ACOs allow for flexibility in the type of organization.  Some regions may prefer independent practice associations (IPAs) while others  may prefer a physician-hospital organization (PHO).

In short, it just might be worth a closer look if you and a couple of your closest primary care friends (need at least 2-3) have a robust electronic health record and are willing to take on chronic illnesses and figure out ways to deliver preventive services effectively. Good care should lead to more money. Stay tuned and good luck.