Holding Caregivers Accountable

Payers for health services have attempted to restructure payment methodologies to align provider incentives with the production of efficient and quality care. Accountable care organizations are the latest iteration of this trend.

Section 3022 of the new health reform law authorizes the Medicare program to contract with accountable care organizations (ACOs) beginning in January 2012. A recent brief from Health Affairs and the Robert Wood Johnson Foundation attempts to describes what ACOs will look like in the coming years.

Under the statutes established by the Patient Protection and Affordable Care Act (PPACA), ACOs are designed to be networks of physicians, hospitals and other clinicians which participate in Medicare parts A and B. These groups are eligible for payments under a the “shared savings plan.” Whatever Medicare determines are savings as a result of care coordination, the ACO will be entitled to a portion of that money. The goal of such a plan is to find a replacement for the traditional fee-for-service system in Medicare.

At minimum, the ACOs must participate in the shared savings plan for 3 years and must cover the care of at least 5000 Medicare enrollees. Most primary care physicians have patient panels of 1500 to 2500 patients; a fraction of these are usually Medicare enrollees.

Five main classes of delivery systems are thought to be possible models for ACOs. Integrated delivery systems like Kaiser Permanente represent one potential model. In the integrated delivery system, hospitals and physician practices are all owed by a single entity. As with Kaiser Permanente, all the enrollees are insured under the same health plan. This allows the aligning of incentives for both the payer and the provider.

A second potential model for ACOs is the multispecialty group practice, such as the Cleveland Clinic. Here, the clinicians all comprise one cooperative medical group with mechanisms to coordinate care. The multispecialty group often will own or at least have a strong relationship with a single acute care hospital.

A third model, the physician-hospital organization, operates similarly to the multispecialty group except that the medical staff are not employees but remain independent providers. Theoretically, physicians in this setting agree to work collaboratively with others practicing at a particular hospital. Advocate Health in Chicago is one example.

The independent practice association represents the fourth possible model for ACOs. These independent practices jointly contract with insurers (instead of hospitals) to help coordinate care.

Virtual physician organizations are the rural answer to ACOs, which might be more natural developments in metropolitan areas. Community Care of North Carolina practices this type of structure. Virtual networks help small practices share resources.

The goal of ACOs is to bridge the disparate roles of inpatient care and outpatient care which in today’s medical world are experienced in separate silos.

The ACO experiment in Medicare will not change the way clinicians and hospitals deal with the remainder of their patient populations with other insurance sources. Fee-for-service payment will still be the predominant reimbursement scheme for office based physicians; DRG reimbursement will still apply to hospitals.

Another important issue is how much of the savings will be shared with the ACOs. And then, how much of that money will subsequently be shared with the clinicians. If those amounts remain insignificant, the ACO movement may not catch on.

Commentary

Accountable Care Organizations (ACOs) are an idea floated by policy experts with the goal of creating seamless and efficient care between the inpatient and outpatient settings.

However, convincing individual physicians to restructure their businesses (which are each independent profit-making endeavors) and create a single entity may prove difficult. Organizations which best accommodate this philosophy also tend to compensate their clinicians as salaried employees (integrated systems, multispecialty groups). ACOs structured in ways where clinicians still try to maximize their individual income may do a good job of coordinating care, but will fail at decreasing costs. Policy researchers must look diligently at the model of the physician-hospital organization, which likely represents the greatest opportunity for change, innovation, and impact.

“Health Policy Brief: Accountable Care Organizations.” Health Affairs. July 27, 2010.

by

Cedric K. Dark, MD, MPH