Accountable care organizations are garnering a lot of attention as a way to reform how health care is paid for in the United States, but just about the only thing that experts can agree on right now is that the ACO concept is still in its infancy.

Dr. Steve Allen is the CEO of Nationwide Children’s Hospital, where it has already established itself as a thriving accountable care organization for at least the last five years.

“This is sort of an evolving area of health policy, and it’s not exactly clear that, when people are talking about ACOs, [everyone] has the same thing in mind,” said Dr. Francis J. Crosson, senior fellow in the Kaiser Permanente Institute for Health Policy in Oakland, Calif., and a member of a task force on ACOs that was recently convened by the National Committee for Quality Assurance (NCQA).

In general, ACOs would allow primary care physicians, specialists, and hospitals to form a partnership to provide care to a group of patients. The idea is that all the providers would work together to improve quality and manage costs, and that they would share in any savings that were produced as a result. A few models already exist for both pediatric and adult populations.

While many hospitals are still just contemplating their potential role in an ACO, Nationwide Children’s Hospital in Columbus, Ohio, is billing itself as the country’s largest pediatric ACO. It offers one model for how to pursue this concept in the care of children.

Starting about 5 years ago, Nationwide officials partnered with the state of Ohio to assume financial risk in treating children who were covered by the Medicaid managed care program in central and southeast Ohio. To help run the program, they formed a nonprofit physician-hospital organization called Partners for Kids that includes not only Nationwide-employed physicians but also other physicians working in the community.

Under the arrangement, Partners for Kids receives a capitated fee to care for about 285,000 pediatric Medicaid recipients. The organization contracts with three Medicaid managed care plans that retain a percentage of the Medicaid premium to provide claims processing, member relations, and other medical management functions. The hospital and physicians assume the business risk for clinical and financial outcomes.

The idea was to move away from the conventional fee-for-service model while improving access for children who might otherwise have difficulty finding a physician, said Dr. Steve Allen, chief executive officer for Nationwide. For example, Partners for Kids pays primary care physicians in rural areas an increased fee to keep their panels open for these Medicaid patients.

“We saw this as an opportunity to change the paradigm so that we could improve access,” Dr. Allen said.

Officials at Nationwide Children’s Hospital have conducted an analysis of the current ACO landscape and found that about a dozen institutions around the country are planning to develop or have launched some type of a pediatric ACO, with sizes ranging from 30,000 patients to Nationwide’s high of 285,000. Most of the more developed models are among integrated delivery systems, Dr. Allen said.

One integrated system looking to become an ACO is University Hospitals in northeast Ohio, which includes the Rainbow Babies and Children’s Hospital.

Participating in an ACO will mean shifting the system’s focus from an acute, episodic care model to a prevention and wellness model, according to Dr. Eric Bieber, chief medical officer at University Hospitals Case Medical Center and Rainbow Babies and Children’s Hospital.

“Health care in its present design is highly episodic. It doesn’t relate one piece to the other,” he said. Switching to an ACO model “is a transformational change in how care is going to be delivered.”

There has been a lot of buzz around ACOs since the passage of the Affordable Care Act. The massive health reform law includes three sections with implications for forming ACOs. The section that has received the most attention is the Medicare shared-savings program, which will allow groups of providers to work together in treating patients and to share in any potential savings they achieve. That program is set to launch in January 2012. CMS is expected to put out their criteria for the shared-savings program sometime this fall.

ACOs may also end up being part of testing performed by the Center for Medicare and Medicaid Innovation, a new office created under the law. The innovation center has broad authority to test new payment ideas and will launch in January 2011.

Finally, the Affordable Care Act includes a pediatric ACO demonstration project that allows states to recognize pediatric medical providers as ACOs and to award incentive payments through Medicaid. That project is also expected to launch in January 2012.

Since the passage of the Affordable Care Act, there’s been a “flurry of activity” going on around the country, similar to what happened in the early 1990s around the growth of HMOs and capitation, said Dr. Crosson of the Kaiser Permanente Institute, who is also a pediatrician. “All over the country, hospital boards are going off with their medical staffs and asking the question, ‘Do we want to become an ACO?’?”

In the near term, there is likely to be a range of ACO models, Dr. Crosson predicted. Some will be tightly constructed around integrated delivery systems in which physicians and hospitals are part of the same economic entity. Other will be looser models that bring together a group of physicians and hospitals that are financially separate from one another, he said. The real question, Dr. Crosson noted, is not whether various models can be designed, but which ones will work best. And for that, he said, only time will tell.

But he added that pediatricians will have a role, especially if they have had success in transitioning to a patient-centered medical home practice. The type of care coordination that happens at the individual practice level is the same type of capability a physician will need to be successful within an ACO, he said.

“I think there’s room in this for virtually everyone to be in the game and try to get it to work,” Dr. Crosson said.

As the ACO concept develops, pediatricians may find that they are getting a lot more attention from hospitals that are interested in developing closer, more collaborative relationships with them, said Dr. Allen of Nationwide Children’s Hospital.

“I think [pediatricians] are going to find themselves to be incredibly popular,” Dr. Allen said.

The NCQA has convened a task force to study the concept of ACOs, and this month it plans to release its recommendations for what qualifying criteria these organizations should meet.

The task force includes representatives from organizations that consider themselves to be ACOs or that are developing plans to launch one. The diverse group has been working on setting out specific criteria – from governance structures to the ability to manage financial risk – that will help ACOs to succeed in the coming years.

“The idea [of ACOs] is mom and apple pie, and it’s terrific to talk about in its generalities,” said Tricia Barrett, vice president of product development at the NCQA. “But as soon as you start talking about specifics, you realize that nobody’s talking about the same thing.”

Over the past few months, task force members have delved into the details and found some common ground, she said, recognizing that there will be a variety of ways to run an ACO. For example, there is consensus within the task force that primary care and the principles of the patient-centered medical home need to be at the foundation of the ACO. The extent to which specialists and hospitals are part of the same legal entity, rather than contracted with primary care physicians, will depend on the dynamics in individual marketplaces, she said.

The task force is also making headway on the specific qualifying criteria that ACOs should meet to demonstrate that they are set up for success. For example, task force members generally agree that there should be rules around the composition of provider networks within ACOs. This would ensure that patients have a certain level of access to both primary care and specialist physicians, and that the ACO is able to support the full spectrum of patient needs.

Performance measurement will also be a critical way to evaluate ACOs. However, getting to reliable, comparable performance results related to these organizations will take some time, Ms. Barrett said.

The NCQA task force members are also focused on ensuring that there are consumer protections built into the ACO structure. Consumers need to be considered in the design and policies of an ACO so that they have a full understanding of what their obligations and rights are, Ms. Barrett said.

Naseem S. Miller contributed to this report.

ACO Discussions Begin; Pediatricians Will Play a Role