Medical Grand Rounds

Accountable care organizations, the patient-centered medical home, and health care reform: What does it all mean?

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ABSTRACTMedical care in the United States is plagued by extremely high costs, poor quality, and fragmented delivery. In response, new concepts of integrated health care delivery have developed, including patient-centered medical homes and accountable care organizations (ACOs). This article reviews these concepts and includes a detailed discussion of the Centers for Medicare and Medicaid Services’ ACO and Shared Savings Proposed Rule.


  • Compared with other developed countries, health care in the United States is among the costliest and has poor quality measures.
  • The patient-centered medical home is an increasingly popular model that emphasizes continuous coordinated patient care. It has been shown to lower costs while improving health care outcomes.
  • Patient-centered medical homes are at the heart of ACOs, which establish a team approach to health care delivery systems that includes doctors and hospitals.
  • Applications are now being accepted for participation in the Centers for Medicare and Medicaid Services’ ACO Proposed Rule. The 3-year minimum contract specifies numerous details regarding structure, governance, and management, and may or may not involve risk—as well as savings—according to the plan chosen.



The US health care system cannot continue with “business as usual.” The current model is broken: it does not deliver the kind of care we want for our patients, ourselves, our families, and our communities. It is our role as professionals to help drive change and make medical care more cost-effective and of higher quality, with better satisfaction for patients as well as for providers.

Central to efforts to reform the system are two concepts. One is the “patient-centered medical home,” in which a single provider is responsible for coordinating care for individual patients. The other is “accountable care organizations,” a new way of organizing care along a continuum from doctor to hospital, mandated by the new health care reform law (technically known as the Patient Protection and Affordable Care Act).


Since health care reform was initially proposed in the 1990s, trends in the United States have grown steadily worse. Escalating health care costs have outstripped inflation, consuming an increasing percentage of the gross domestic product (GDP) at an unsustainable rate. Despite increased spending, quality outcomes are suboptimal. In addition, with the emergence of specialization and technology, care is increasingly fragmented and poorly coordinated, with multiple providers and poorly managed resources.

Over the last 15 years, the United States has far surpassed most countries in the developed world for total health care expenditures per capita.1,2 In 2009, we spent 17.4% of our GDP on health care, translating to $7,960 per capita, while Japan spent only 8.5% of its GDP, averaging $2,878 per capita.2 At the current rate, health care spending in the United States will increase from $2.5 trillion in 2009 to over $4.6 trillion in 2020.3

Paradoxically, costlier care is often of poorer quality. Many countries that spend far less per capita on health care achieve far better outcomes. Even within the United States, greater Medicare spending on a state and regional basis tends to correlate with poorer quality of care.4 Spending among Medicare beneficiaries is not standardized and varies widely throughout the country.5 The amount of care a patient receives also varies dramatically by region. The number of specialists involved in care during the last year of life is steadily increasing in many regions of the country, indicating poor care coordination.6


The problems of high cost, poor quality, and poor coordination of care have led to the emergence of the concept of the patient-centered medical home. Originally proposed in 1967 by the American Academy of Pediatrics in response to the need for care coordination by a single physician, the idea did not really take root until the early 1990s. In 2002, the American Academy of Family Medicine embraced the concept and moved it forward.

According to the National Committee for Quality Assurance (NCQA), a nonprofit organization that provides voluntary certification for medical organizations, the patient-centered medical home is a model of care in which “patients have a direct relationship with a provider who coordinates a cooperative team of healthcare professionals, takes collective responsibility for the care provided to the patient, and arranges for appropriate care with other qualified providers as needed.”7

Patient-centered medical homes are supposed to improve quality outcomes and lower costs. In addition, they can compete for public or private incentives that reward this model of care and, as we will see later, are at the heart of ACO readiness.

Medical homes meet certification standards

NCQA first formally licensed patient-centered medical homes in 2008, based on nine standards and six key elements. A scoring system was used to rank the level of certification from level 1 (the lowest) to level 3. From 2008 to the end of 2010, the number of certified homes grew from 28 to 1,506. New York has the largest number of medical homes.

In January 2011, NCQA instituted certification standards that are more stringent, with six standards and a number of key elements in each standard. Each standard has one “mustpass” element (Table 1). NCQA has built on previous standards but with increased emphasis on patient-centeredness, including a stronger focus on integrating behavioral health and chronic disease management and involving patients and families in quality improvement with the use of patient surveys. Also, starting in January 2012, a new standardized patient experience survey will be required, known as the Consumer Assessment of Healthcare Providers and Systems (CAHPS).

The new elements in the NCQA program align more closely with federal programs that are designed to drive quality, including the Centers for Medicare and Medicaid Services program to encourage the use of the electronic medical record, and with federal rule-making this last spring designed to implement accountable care organizations (ACOs).

Same-day access is now emphasized, as is managing patient populations—rather than just individual patients—with certain chronic diseases, such as diabetes and congestive heart failure. The requirements for tracking and coordinating care have profound implications about how resources are allocated. Ideally, coordinators of chronic disease management are embedded within practices to help manage high-risk patients, although the current reimbursement mechanism does not support this model. Population management may not be feasible for institutions that still rely on paper-based medical records.


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