If the accountable care organization becomes the dominant way healthcare is organized in the future, providers will likely face the wrath of both the public and the pundits under ACOs. That will come later, but it is inevitable because one of the chief priorities of ACOs concerns limiting utilization—the same role HMOs once filled.
Under the current payment system, hospitals are the hub of the healthcare experience. They do the most expensive procedures, but generally, their responsibility to the patient ends at discharge. Beyond broad regulations focusing on readmission rates and quality scores, the new healthcare reform law includes demonstration projects that provide incentives and, notably, penalties for providers if they do a poor job of coordinating care. That means if ACOs become the dominant reimbursement structure, communication and handoffs between the hospital and ancillaries, including ambulatory care, surgery centers, primary care providers, the pharmacy, even hospice, will become especially important.
Central to the ACO concept is the idea that patients deserve to have their care coordinated such that one entity giving a service to the patient has all the information about what has been done for that patient elsewhere in the continuum, and then takes that information into account when treating that patient. Such a model helps remove some of the waste in healthcare due to duplicative care, and also makes some entity responsible—through shared payment—for not only distributing that payment equitably among entities involved in the episode of care, but taking responsibility that the patient will not have to seek care to rectify a health problem that should have been addressed during the episode. But who, or what, should that entity be?
It doesn’t necessarily have to be the hospital. In many cases, it will be, but other organizations, most commonly health plans and large multispecialty physician practices and medical service organizations can also serve as the “accountable” party in the ACO.
What is an ACO?
It’s a legitimate question. Several organizations, including CMS, have demonstration projects or independent trials going on right now, with dozens of organizations spending real money to try to figure out how to compete in a new reimbursement paradigm. But they clearly haven’t figured out how transform an idea that makes common sense into one that makes business sense.On its face, the ACO is a simple structure. It has two functions. Most important, says Michael Sachs, chairman and CEO of Sg2 Inc., a Chicago healthcare information company, it manages utilization. A distant second priority, when utilization of a service is to take place, is to find where it can be done most efficiently.
“Whatever the unit of service is, you want to reduce it,” says Sachs. “Whether I buy the procedure at $4,000 or $5,000 isn’t terribly significant. It’s whether the procedure is done at all.” He offers, as an example, visiting two different auto body shops and having them compete on the service. You may save by shopping around, but the big point is: Did you get in the accident?
“People always want to go straight to the second element, but that’s not where the savings are going to be and where the real innovation is,” he says. Instead, savings will revolve largely around new models of care, which is where the bigger payoff lurks. He mentioned that over the past 30 years, “whenever there’s been a preauthorization put in front of the utilization of the service, utilization has decreased.”
Ah, but that’s what managed care has done and has continued to do, much to the chagrin of many, if not most, patients and physicians. For example, over the past four years or so, managed care organizations have required preauthorization of imaging, although they have backed off of preauthorization in many other areas.
“The cost is really not in seeing the doc,” he says. “You can’t get the imaging anymore unless it’s preauthorized, so that’s how you manage utilization.”
The Access to Medical Imaging Coalition says in a report that imaging utilization has decreased since the Deficit Reduction Act of 2005, which included the provisions to do so. For instance, the use of CT, MRI, PET, and nuclear services grew by only 1.1%, much slower than before. Meanwhile, screening mammography and the use of dual energy x-ray absorptiometry to detect osteoporosis continue to decline in volume.
Much of the discussion about ACOs has hovered over what entity will have control. Will it be a business entity? Will it be a bunch of joint ventures? Those issues will be worked out, say those who have already embarked on accountable care. The main issue that needs to be solved is clinical integration among a wide variety of players in patients’ healthcare.
“Why does it have to be a hospital-based initiative?” asks Simon Prince, MD, president and CEO of Beacon IPA in Manhasset, NY. Prince and his colleagues believe an independent practice association can do the trick. He’s already got 200 physicians in his IPA, and he believes they are nearly ready for ACO-style healthcare.
“There are still a bunch of us private practitioners, but there’s also a lot of consolidation in our marketplace. Docs are running to the hospital for safety and security in fear of healthcare reform. Staying put in a private practice silo and not doing something may not be the right solution,” he says. “But it seemed there are other alternatives.”
Much of the discussion about ACOs has hovered over what entity will have control. Will it be a business entity? Will it be a bunch of joint ventures? Those issues will be worked out, say those who have already embarked on accountable care. The main issue that needs to be solved is clinical integration among a wide variety of players in patients’ healthcare.
“There are still a bunch of us private practitioners, but there’s also a lot of consolidation in our marketplace. Docs are running to the hospital for safety and security in fear of healthcare reform. Staying put in a private practice silo and not doing something may not be the right solution,” he says. “But it seemed there are other alternatives.”
It’s also easy to get rid of physicians who aren’t meeting the mandates of the IPA, which include some of the goals in ACOs, such as clinical integration and other infrastructure, such as a common electronic medical record system. That said, Prince is not yet completely committed to forming an ACO with Beacon, which is only a few months old. Much of that depends on the cooperation with private payers and CMS, after all.
But early signs are encouraging, he says. He’s courting third parties to help with billing software, determine what corporate functions of the IPA they can farm out. Also, he wanted to use an EMR that wasn’t necessarily linked to any one hospital or health system, so that the IPA can have a dialogue with payers allowing the IPA to remain free agents.
In general, as he’s spoken with all the commercial payers in his region, they are more supportive of his group than he anticipated, he says.
“There’s an appetite for this type of physician-led initiative. Competition is probably one reason because having a competitive playing field is important to the payers and our patients. If every practitioner runs en masse to a hospital or health system, it doesn’t help with that competitive balance.”
Payers, he says, want quality, value, and the understanding that the physicians in the IPA will police themselves. “They want assurances that we will work with them on cost savings,” he says.
One of the main initiatives of the IPA is to set up evidence-based guidelines for physician behavior to help limit overutilization.“We’ll have data and see who the outliers are, and there are teeth in the agreement,” he says. Quality initiatives will be put in place, and rates will be based on how well the group’s physicians meet those targets. Outliers will be asked to leave.
“If we do go down the road of the ACO, everyone needs to be rowing in the same direction. It won’t make sense to be a high utilizer and gaming the system. We value private practitioners because we are them. We will help you get there and give you a platform to have a voice.”
Philip Betbeze is a senior leadership editor with HealthLeaders Media. He can be reached at pbetbeze@healthleadersmedia.com.
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