Physicians, Health Care Industry Examine the Prospect, Promise of ACOs

With accountable care organizations becoming an almost-certainty, hospitalists would be wise to start determining how they will fit into the new model, according to Dr. Ron Greeno.

The ACO concept, which was part of the Affordable Care Act, has now been further fleshed out in a proposed regulation issued March 31 by the Centers for Medicare and Medicaid Services. But, said Dr. Greeno, "we were heading down this road even before the bill was passed."

Dr. Greeno, chief medical officer and cofounder of Cogent Healthcare, said that although Republicans have talked about repealing certain sections – or all – of the Affordable Care Act, the ACO concept will not go away. "I’d advise every organization to get ready for it," he said. "There is no Plan B."

The proposed rule, however, has disappointed some hospitalists, said Dr. Greeno. There is a high cost to meeting all of the regulatory and financial requirements, and to creating the electronic health record infrastructure. But the government is "not offering a great deal of upside on the financial side," for those who do participate, he said.

Even so, hospitalists will have opportunities in the new world, he said. For an ACO to take on risk, it will have to do a good job of managing patients, especially on the inpatient side where at least a third of health care dollars are spent, said Dr. Greeno. Hospitalists can partner with hospitals, but that does not mean they have to become employees.

In California, hospitalists have been taking capitation for years – and that’s good preparation for the new delivery model, he said. One of the organizations that have done very well under the capitated model is HealthCare Partners, said Dr. Greeno. The independent physician association (IPA), based in Torrance, Calif., plans to participate in the new Medicare shared-savings program for ACOs, which will launch in January, said Dr. William Chin, the IPA’s executive medical director. The group has been preparing for the transition for awhile: It is currently also working with Anthem Blue Cross in California to test how an ACO would work in the commercial market as well as testing ACO accreditation standards that are being developed by the National Committee for Quality Assurance (NCQA).

Dr. Chin said that the IPA’s long-term capitation experience will help it transition to being an ACO.

"We have had the experience of improving outcomes and reducing costs, improving patient satisfaction, [and] improving the patient experience in our model," Dr. Chin said. "Some of the common goals of the ACO are things that we are doing today."

This year is likely to be a "learning year" for the IPA’s practices, Dr. Chin said, as they prepare to meet the various standards that are being developed for ACOs. One advantage they will have is that their practices have already adopted electronic health records. Without that investment in technology, it’s nearly impossible to become efficient and to improve quality, because paper charts are intractable to analysis, according to Dr. Chin.

But even with EHRs in place, all practices seeking to become ACOs will have to deal with significant culture changes and shifts in the delivery model, he said.

ACOs have been a hot topic in health care circles since they were written into the Affordable Care Act. The law includes the shared-savings program through Medicare, which will allow ACOs to earn additional payments if they can both save the government money and meet quality benchmarks. As the program goes forward, physicians also would assume some financial risk if they are unable to provide cost-effective care.

Under the new voluntary program, ACOs could include physicians in group practices, networks of individual practices, hospitals that employ physicians, and partnerships among these entities as well as other providers.

An ACO will be a partnership among both primary care and specialist physicians; however, only primary care providers will be able to form an ACO, according to the proposed regulation.

Providers working in an ACO would continue to receive regular payments under Medicare fee for service, but could qualify for additional payments if they save money for the program. The proposed regulation requires that ACOs meet quality standards and demonstrate that they have reduced costs in order to be eligible to share in savings. The proposal outlines 65 quality measures in five domains: patient experience, care coordination, patient safety, preventive health, and metrics for the care of at-risk and frail elderly populations.

The proposed regulation also creates two models for how an ACO can share in the potential Medicare savings, depending on its level of maturity. Under a one-sided risk model, a less-developed ACO can share in the savings they produce during the first 2 years and then assume financial risk in year 3, sharing in any potential financial losses.