Accountable care organizations, the patient-centered medical home, and health care reform: What does it all mean?
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.
KEY POINTS
- 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.
Structure of an ACO
Under the proposed rule, the minimum population size of Medicare beneficiaries is 5,000 patients, with some exceptions in rural or other shortage areas, or areas with critical access hospitals. ACO founders can be primary care physicians, primary care independent practice associations, or employee groups. Participants may include hospitals, critical access hospitals, specialists, and other providers. The ACO must be a legal entity with its own tax identification number and its own governance and management structure.
Concerns have been expressed that, in some markets, certain groups may come together and achieve market dominance with more than half of the population. Proposed ACOs with less than 30% of the market share will be exempt from antitrust concerns, and those with greater than 50% of market share will undergo detailed review.
Patient assignment
Patients will be assigned to an ACO retrospectively, at the end of the 3 years. The Centers for Medicare and Medicaid Services argues that retrospective assignment will encourage the ACO to design a system to help all patients, not just those assigned to the ACO.
Patients may not opt out of being counted against ACO performance measures. Although Medicare will share beneficiaries’ data with the ACO retrospectively so that it can learn more about costs per patient, patients may opt out of this data-sharing. Patients also retain unrestricted choice to see other providers, with attribution of costs incurred to the ACO.
Quality and reporting
The proposed rule has 65 equally weighted quality measures, many of which are not presently reported by most health care organizations. The measures fall within five broad categories: patient and caregiver experience, care coordination, patient safety, preventive health, and managing at-risk populations, including the frail elderly. Bonus payments for cost-savings will be adjusted based on meeting the quality measures.
Governance and management
Under the proposed rule, an ACO must meet stringent governance requirements. It must be a distinct legal entity as governed by state law. There must be proportional representation of all participants (eg, hospitals, community organizations, providers), comprising at least 75% of its Board of Trustees. These members must have authority to execute statutory functions of the ACO. Medicare beneficiaries and community stakeholder organizations must also be represented on the Board.
ACO operations must be managed by an executive director, manager, or general partner, who may or may not be a physician. A board-certified physician who is licensed in the state in which the ACO is domiciled must serve on location as the full-time, senior-level medical director, overseeing and managing clinical operations. A leadership team must be able to influence clinical practice, and a physician-directed process-improvement and quality-assurance committee is required.
Infrastructure and policies
The proposed rule outlines a number of infrastructure and policy requirements that must be addressed in the application process. These include:
- Written performance standards for quality and efficiency
- Evidence-based practice guidelines
- Tools to collect, evaluate, and share data to influence decision-making at the point of care
- Processes to identify and correct poor performance
- Description of how shared savings will be used to further improve care.
CONCERNS ABOUT THE PROPOSED NEW ACO RULE
While there is broad consensus in the health care community that the current system of care delivery fails to achieve the desired outcomes and is financially unsustainable and in need of reform, many concerns have been expressed about the proposed new ACO rule.
The regulations are too detailed. The regulations are highly prescriptive with detailed application, reporting, and regulatory requirements that create significant administrative burdens. Small medical groups are unlikely to have the administrative infrastructure to become involved.
Potential savings are inadequate. The shared savings concept has modest upside gain when modeled with holdback.16 Moreover, a recent analysis from the University Health System Consortium suggested that 50% of ACOs with 5,000 or more attributed lives would sustain unwarranted penalties as a result of random fluctuation of expenditures in the population.17
Participation involves a big investment. Participation requires significant resource investment, such as hiring chronic-disease managers and, in some practices, creating a whole new concept of managing wellness and continuity of care.
Retrospective beneficiary assignment is unpopular. Groups would generally prefer to know beforehand for whom they are responsible financially. A prospective assignment model was considered for the proposed rule but was ultimately rejected.
The patient assignment system is too risky. The plurality rule requires only a single visit with the ACO in order to be responsible for a patient for the entire year. In addition, the fact that the patient has the freedom to choose care elsewhere with expense assigned to the ACO confers significant financial risk.
There are too many quality measures. The high number of quality metrics—65—required to be measured and reported is onerous for most organizations.
Advertising is micromanaged. All marketing materials that are sent to patients about the ACO and any subsequent revisions must first be approved by Medicare, a potentially burdensome and time-consuming requirement.
Specialists are excluded. Using only generalists could actually be less cost-effective for some patients, such as those with human immunodeficiency virus, end-stage renal disease, certain malignancies, or advanced congestive heart failure.
Provider replacement is prohibited. Providers cannot be replaced over the 3 years of the demonstration, but the departing physician’s patients are still the responsibility of the plan. This would be especially problematic for small practices.
