6 Necessary Guidelines to Create and Manage a Successful ACO

The following six guidelines are necessary to successfully create and manage an ACO

Accountable care organizations represent a revolutionary shift in the healthcare business model. They are an attempt to move from emphasizing volumes to emphasizing outcomes, whereby the focus transitions from treating individuals when they get sick to keeping groups of people healthy by applying appropriate levels of care at the right place and the right time. Moreover, they perpetuate a shift from hospitals and physicians seeking market share and being responsible for those who seek their services to being responsible for the needs of an entire community. Many have suggested that accountable care is simply "old wine in new bottle," believing that managed care of the 1990s is virtually identical to the present accountable care model. However, at this point in time, patients are clamoring for quality outcomes and not simple "managed care." The following six guidelines are necessary to successfully create and manage an ACO.

1. Understanding the ACO model
An ACO is an amalgamation of providers and institutions that accepts full responsibility for the risk-based management of a defined population. The idea is that if providers are incentivized to improve the health of their patients, the cost of medical care will decrease. ACOs are also motivated to improve the quality of care, decrease hospital admissions and readmissions, and tailor post-acute care services to be as efficient as possible.

Presently, CMS has identified the following entities that are able to form an ACO. They include:

  • Physician group practices
  • Networks of individual practices
  • Partnerships or joint venture agreements between hospitals
  • Physicians employed by hospitals
  • Medicare providers and suppliers determined by the Secretary of the Department of Health and Human Services
  • Other providers can partner with ACO participants to form an ACO, but are not able to do so independently.

Additionally, CMS has set forth a significant list of parameters organizations must comply with in order to function as an ACO. A few of these requirements include:

  • The ability to manage at least 5,000 Medicare beneficiaries for a performance year
  • A leadership and management structure that includes clinical and administrative systems
  • Processes for promoting evidence-based medicine and coordination of care with the ability to report on quality and cost outcomes
  • The presence of a formal legal structure to receive and distribute shared savings payments
  • A three-year participation agreement for the ACO project

In order to qualify and be successful, potential providers must invest time and money. Any thriving ACO will need the components of a vertically integrated health system, including at a minimum:

  • A multi-specialty group practice with a number of primary care physicians and specialists large enough to provide medical services to all of the enrollees
  • A community or primary care hospital for most inpatient services
  • A tertiary care center or academic hospital for specialty services
  • Home healthcare services
  • Mental health services, both inpatient and outpatient
  • A structure to manage post-acute care services
  • Rehabilitation services
  • A children's hospital or children's tertiary care center if pediatric patients are enrolled in the ACO

While all of these components are necessary in ACO management, they can be structured in many different ways, including ownership by one entity, a partnership of multiple entities or mutual agreement among the entities for discounted fee for services in exchange for referral volume.

2. Recognize the necessity of information technology
The ability to transmit summaries of care across the continuum of care is critical. A 2012 issue of Health Affairs reports that CMS estimated the cost of poor communication of patient data was between $25 billion and $45 billion annually.

Given the entailed risks, ACOs should build, buy or contract systems necessary to manage patient care. A number of transformative technologies and applications exist that can increase value, improve quality and effectively manage care for patient populations. These transformative technologies include electronic health records, provider profiling, virtual single medical records, population health messaging/alerts, clinical decision support software and end-of-life management, such as palliative care and hospice.

The IT requirements necessary for a successful ACO include the following:

  • First and foremost, providers must identify how sick, and therefore how costly, the patient population is they're assigned.
  • Next, ACOs should assemble a care exchange capable of interacting and sharing information seamlessly between the affiliated hospitals, physicians, long-term acute care hospitals and nursing homes.
  • IT systems should be capable of generating population health alerts warning physicians about needed actionable healthcare interventions.
  • Clinical support tools, such as computerized physician order entry and clinical decision support software, should be in place to inform physician clinical decision-making at the point of care.
  • Typically, successful systems install hard stops in computerized physician order entry systems that force clinicians to choose guideline-based care. Physicians are only able to opt out of guideline-based care if they explain why guideline care was not chosen. For instance, a patient who has an acute myocardial infarction, but is bleeding profusely is not an appropriate candidate to receive aspirin, which will make bleeding worse even though aspirin is a standard treatment for acute myocardial infarction. Clinical decision support systems can prevent such errors and suggest the best care pathways.

3. Implement clinical strategies
It's important to align all care initiatives. During any hospital admission, the utilization of clinical practice guidelines and computerized physician order entry are known to facilitate care. EHRs that provide clinical decision support to physicians are important factors in improving clinical outcomes during the hospital stay. A June 2014 report published in the Annals of Internal Medicine showed that the combination of a patient-centered medical home model and EHRs gave primary care physicians the best chances at improving the quality of care their patients receive.

Another clinical strategy ACOs should implement is to effectively stratify patients who present the greatest risk for readmission. This helps predict those who need to be monitored more closely with early primary care follow up, transition coaches, telemedicine and other clinical interventions. What's more, segmenting patients into diagnostic coding groups can better help identify patients at risk of admission or readmission. Providers should conduct a comprehensive assessment and develop a care transition plan for the greatest at-risk patients. The plan should include significant information from the hospitalization and guide the patient with specific post-discharge instructions, including reconciling all medications electronically. The patient can then be placed on an ongoing surveillance program for intermittent follow-up approximately 30 days after hospitalization (assuming that the patient has not been readmitted).

4. Assure admission to lower cost in-network hospitals
A founding principle of ACO care is to direct the patient to the ACO home hospital, therefore retaining the patient within the ACO network. Typically the ACO hospital should be highly efficient and less expensive than competing hospitals. This allows the ACO to maintain control of its patients and its financial resources and "pay itself" for the care it provides rather than sending money to a competing hospital or health system.

To ensure patients remain within the network, ACO managers should evaluate both the quality of their physicians and their referral patterns. In deciding which physicians can join an ACO, physician leaders should use standard quality metrics of physician credentialing including ongoing professional physician evaluation, malpractice reviews and patient satisfaction or engagement surveys. Additionally, physician leaders should look at the quality of the physicians and hospitals to which a physician refers. Frequently, primary care physicians do not perform overly invasive, unnecessary or expensive testing, but if they refer patients to specialists who perform these tests, the effect is devastating to both the ACO's bottom line and the patient's clinical care. Physicians who refer outside of the ACO provider network cause "leakage" of patient care dollars to competitors.

5. Follow CMS' quality metrics
Hospitals are encouraged to continue to emphasize the quality metrics that CMS has developed as measures of ACO overall quality. In the next few years, most healthcare experts believe that private insurers will follow CMS' lead and begin penalizing hospitals and eligible medical providers for healthcare quality deficits. Furthermore, most healthcare economists believe that base rate reimbursement for hospitals and providers will become severely constrained. Given this, it has become incumbent on hospitals and others in healthcare to benchmark their clinical efficiency. This can be done using software that aggregates data from national samples of hospitals on staffing patterns of nurses, hospitalists, security guards and other personnel. Technology has also standardized data arranged by percentile on such relatively abstruse yet costly expenditures such as linen costs per admission. Other programs, such as Six Sigma or Leapfrog, provide additional information on measures and techniques for improving hospital efficiency. Hospitals that attain top decile performance on such measures of efficiency will be well on their way to becoming ACO ready.

6. Improve care across the continuum

As previously mentioned, studies have indicated that care transitions account for a preponderance of medical errors, which not only harm patients but account for billions in wasteful spending. Since ACO providers are ultimately responsible for all costs of care for their patient, it is imperative that these care transitions are managed wisely.

The overarching key to doing this efficiently and safely is establishing provider accountability. By including all medical records that meet certain minimum standards and transferring the patient's primary diagnosis and problem list to the appropriate parties during the care process, providers create guidelines for future practices. Detailed accounts of the patient's cognitive status, primary language and reports of critical and pending test results, in addition to proper identification of the primary care coordinating physician, are imperative to successfully move patients through the care process. When a provider acts as the "hub" of care, the best care coordination occurs.

Moreover, adherence to national standards of continuous quality measurement and improvement as well as standardized treatment plans result in the most efficient, effective care possible.
Treatment and diagnostic plans, as well as goals of care and prognosis are also important. Any planned surgery or home-based interventions, such as wound care, should be detailed.

Finally and often overlooked, is the need for provision of advanced directives, power of attorney and informed consent. The significance of documents such as a power of attorney and advanced directives cannot be overlooked. Such documents allow providers to care for patients in time of emergency based on their previously expressed wishes. According to a 2010 "60 Minutes" episode, Medicare spent more than $50 billion to cover patients' last two months of life in 2009. Research estimates that savings of approximately 50 percent of this amount are attainable via the use of palliative care and hospice care. Research also indicates patients who avail themselves of palliative care and hospice care actually live longer than comparison patients who are similarly ill. This seems to be due to the fact that highly invasive and stressful medical procedures in terminally ill patients can shorten their lifespan. More often than not, terminally ill patients are not referred to hospice and palliative care until late in their illnesses, potentially shortening their lives and decreasing their opportunity to live and die at home with family and friends.

If an accountable care organization is to be successful, it must work diligently to follow the six guidelines. Most importantly the sections on clinical care improvement should be emphasized.  Ultimately no ACO will be successful unless clinical outcomes, as well as patient engagement and satisfaction, are extraordinary.

Dr. William "Bill" Bithoney, MD, FAAP  serves as managing director with BDO Consulting and chief physician executive for BDO's Healthcare Advisory practice, where he co-leads clinical strategy for the firm's Center for Healthcare Excellence & Innovation. He can be reached at bbithoney@bdo.com.


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