The American Medical Group Association, representing large group practices, played a central role in shaping accountable care organizations and sees group practices, and not hospitals, as the mainstay of ACOs, according to Chet Speed, vice president of public policy for AMGA.
In ACOs' evolution, "we were there at the beginning," he says. CMS' five-year-long Physician Group Practice Demonstration, which sought to improve efficiency at group practices by coordinating care, was winding down when the healthcare reform bill was being drafted. AMGA, which claimed nine of the project's 10 participating group practices as members, proposed a new program based on the demonstration to Senate staffers.
"A large chunk of the ACO section of the law came from the proposal we provided," Mr. Speed says. But that's not the reason why Mr. Speed feels that group practices, and not hospitals, should run ACOs. While he concedes that hospitals play a crucial role in ACOs and could lead them, he lists the following five key reasons why group practices are better positioned to run ACOs.
1. The model for ACOs was based on group practices. The Physician Group Practice Demonstration showed the potential for significant savings and better quality by coordinating care. For example, the Geisinger Clinic and the University of Michigan Faculty Practice Group both showed improvements in a least 29 of 32 quality measures. The University of Michigan Faculty Practice group saved $2.9 million in Medicare spending, surpassing the target put down by the CMS.
2. ACOs will focus on the outpatient side. Coordination of care will occur on the outpatient side, and the aim will be to reduce inpatient utilization, such as reducing admissions and readmissions. "That makes hospitals nervous," Mr. Speed says. He says healthcare's drift away from inpatient care is one reason why hospitals have been buying up practices, and ACOs will accelerate this trend. Integrated systems like Geisinger, which was in the demonstration project, are strong outpatient payors, but most hospitals don’t have enough employed physicians to play, Mr. Speed says.
3. Group practices have a strong interest in ACOs. Mr. Speed says 370 large groups are part of AMGA. "Within AMGA there is certainly significant interest and in some cases outright enthusiasm for ACOs," he says. "They see an opportunity to operate on a much larger stage." Some large groups were disappointed when they set up similar physician-hospital organizations in the 1990s and saw them sputter. But Mr. Speed says there are important differences. The old capitation-based PHOs were a response to the ephemeral managed care market, but ACOs will have government backing and ACO contracts have three-year terms.
4. Group practices have infrastructure. While small practices don’t have the infrastructure needed to run an ACO, group practices understand administration and could go mano a mano with hospitals in trying to run ACOs. Mr. Speed says it will cost $1 million to hire health professionals, set up data-collection systems and make other preparations for an ACO.
5. It will be easier for groups to recruit patients. Each ACO has to recruit at least 5,000 Medicare beneficiaries, but beneficiaries don't have to join. Mr. Speed thinks that will be much easier for groups than hospitals to recruit them. Large group practices usually have 15,000-50,000 Medicare beneficiaries, and patients have a closer, longer-term relationship with their physician than with their hospital, he says.
Hospitals and group practices interested in forming ACOs should start planning soon. Mr. Speed says proposed regulations, detailing how ACOs will function, are expected in the fall, and final rules would be needed by spring 2011 in order for ACOs to meet their start date of Jan. 2012.
Find out more about AMGA.
In ACOs' evolution, "we were there at the beginning," he says. CMS' five-year-long Physician Group Practice Demonstration, which sought to improve efficiency at group practices by coordinating care, was winding down when the healthcare reform bill was being drafted. AMGA, which claimed nine of the project's 10 participating group practices as members, proposed a new program based on the demonstration to Senate staffers.
"A large chunk of the ACO section of the law came from the proposal we provided," Mr. Speed says. But that's not the reason why Mr. Speed feels that group practices, and not hospitals, should run ACOs. While he concedes that hospitals play a crucial role in ACOs and could lead them, he lists the following five key reasons why group practices are better positioned to run ACOs.
1. The model for ACOs was based on group practices. The Physician Group Practice Demonstration showed the potential for significant savings and better quality by coordinating care. For example, the Geisinger Clinic and the University of Michigan Faculty Practice Group both showed improvements in a least 29 of 32 quality measures. The University of Michigan Faculty Practice group saved $2.9 million in Medicare spending, surpassing the target put down by the CMS.
2. ACOs will focus on the outpatient side. Coordination of care will occur on the outpatient side, and the aim will be to reduce inpatient utilization, such as reducing admissions and readmissions. "That makes hospitals nervous," Mr. Speed says. He says healthcare's drift away from inpatient care is one reason why hospitals have been buying up practices, and ACOs will accelerate this trend. Integrated systems like Geisinger, which was in the demonstration project, are strong outpatient payors, but most hospitals don’t have enough employed physicians to play, Mr. Speed says.
3. Group practices have a strong interest in ACOs. Mr. Speed says 370 large groups are part of AMGA. "Within AMGA there is certainly significant interest and in some cases outright enthusiasm for ACOs," he says. "They see an opportunity to operate on a much larger stage." Some large groups were disappointed when they set up similar physician-hospital organizations in the 1990s and saw them sputter. But Mr. Speed says there are important differences. The old capitation-based PHOs were a response to the ephemeral managed care market, but ACOs will have government backing and ACO contracts have three-year terms.
4. Group practices have infrastructure. While small practices don’t have the infrastructure needed to run an ACO, group practices understand administration and could go mano a mano with hospitals in trying to run ACOs. Mr. Speed says it will cost $1 million to hire health professionals, set up data-collection systems and make other preparations for an ACO.
5. It will be easier for groups to recruit patients. Each ACO has to recruit at least 5,000 Medicare beneficiaries, but beneficiaries don't have to join. Mr. Speed thinks that will be much easier for groups than hospitals to recruit them. Large group practices usually have 15,000-50,000 Medicare beneficiaries, and patients have a closer, longer-term relationship with their physician than with their hospital, he says.
Hospitals and group practices interested in forming ACOs should start planning soon. Mr. Speed says proposed regulations, detailing how ACOs will function, are expected in the fall, and final rules would be needed by spring 2011 in order for ACOs to meet their start date of Jan. 2012.
Find out more about AMGA.