This past January’s announcement of an additional 124 new Accountable Care Organizations implies that we have reached an Alternative Payment Model (APM) tipping point, with ACOs becoming more prevalent than standard Fee-for-Service payments, echoing the Centers for Medicare and Medicaid Services’ (CMS) push to move providers away from MIPs
Since the first ACOs were approved six years ago, only around a third of Medicare beneficiaries in the regular Medicare program have been attributed to an ACO for services overall.
That’s significantly below the 50 percent target set by CMS for 2018, and a long stretch to reach Advanced APM status, or ACOs with financial risk.
Just over half of ACOs have successfully come in under expenditure and savings targets, with a much smaller share receiving bonuses.
Providers under the risk-based Next Generation ACO model feared failure under risk and, as a result, several ACOs terminated programs at the end of 2017.
The ACO Model: Providers Unprepared
Most providers are not prepared to move to the ACO model because only a small number of the 562 ACOs have succeeded in achieving any savings at all. Some now risk repayments to Medicare.
The majority lack the confidence that they can organize efforts that will pay off in savings, loyal and satisfied patients, and contented physicians.
Non-ACO providers have legitimate organizational and market issues that raise barriers for ACO participation or development. One is a network cost structure based on facility ownership, technology, and high-end specialty services.
Once profitable investments, these expenditures are now prohibitive to an ACO organization.
Some ACOs are located in an urban area and have more mature networks, deeper market penetration, and experience in value-based commercial insurance participation. Less populated areas have been generally slower to respond to the payment model, with some exceptions.
For those providers who haven’t developed or participated in ACOs, there are legitimate reasons to be reluctant. Reasons such as higher costs coupled with poor physician involvement in the networks.
Physicians: The ACO Front Line vs. Inner Circle
Physicians mourn the loss of their clinical autonomy and time for patients, who strongly agree that time with their physicians is too limited.
For an ACO to successfully provide cohesive, coordinated and cost-effective care, the front line physicians must believe that they have the assistance of their ACO organizations to provide this kind of care.
They will need information and support, but they also must be part of the enterprise’s design and thought leadership.
The ACO model is generally considered to be primary care physician-focused, because patients are attributed to physicians who are delivering the majority of their primary care services.
As a result of the attribution and regardless of whether an ACO physician ordered the care, all costs are assigned to the ACO.
But now hospitals, health systems, or large multi-specialty groups employ most physicians. Even in geographic areas with the largest percentages of independent practices, a minority of physicians are on their own.
Physicians continue to be skeptical and uninformed about health care reform, with a fewer and fewer believing that ACOs are likely to increase quality or decrease cost.
ACOs, Health Care Consumerism, and Loyalty
ACO application and review of attributed patients are geared to viewing them as assets, rather than as individuals. Techniques on how to “manage” patients and avoid network “bleeding” are frequently discussed. This prevailing view of patients as a monolithic group, distinguished mainly by risk level, is troublesome.
Patient concerns about providers are well-documented, and all these issues will be carried over to an ACO unless leadership reengineers attitudes, processes and patient communication.
Why is this important? Because informed consumers are critical to ACO success. Since Medicare-covered individuals can seek care from non-ACO providers, they will use that right if they are not satisfied.
A recent patient survey revealed noteworthy data regarding the formation of an ACO:
● More patients than physicians believe that their visit time with physicians is inadequate.
● 90 percent of patients believe that their providers should look beyond results and evaluate obstacles to improvement in their health.
● Most patients are concerned about their ability to pay for medical care.
● Most patients believe the system is too complicated, and they don’t understand reforms.
From a business perspective, it has long been clear that consumer loyalty comes from addressing consumers’ expressed needs, not by telling them what they should do.
For an ACO to achieve a more prosperous care model, patient trust is essential. A concerted effort to achieve what Fee-for-Service health care could not—providing reliable, accessible information for health care consumer decisions—will help earn that trust.
ACOs Need Innovative Development
The challenge for an ACO lies in its ability to reduce costs in the long term, for two reasons:
First, most ACOs score similarly on quality reporting, regardless of size or organizational structure.
Second, saving money is the hard part and the highest concern for organizations at financial risk. Early savings may come from easily targeted costs, but long term savings are much harder, and require innovation or reengineering of care.
Several factors seem to predict ACO cost savings. On the quality front, ACOs that have been in the program longer tend to do better.
Predictably, more physician-led ACOs achieve shared savings than hospital-led ACOs.
Smaller ACOs surprisingly fared better than larger organizations.
ACO success is also correlated with physician appreciation and prompt attention to patient concerns.
Because size may not be a major determinant of success, ACOs need not focus on getting providers “under the tent”. Instead, a focus on better physician communication and leadership will help hospital-based ACOs construct their ACOs to be more successful.
A Creative ACO Development Agenda
Many organizations assume success is based on the historical prowess of market share and size in the Fee-for-Service world.
In fact, it appears successful ACOs are trending toward leaner, more physician- and patient-focused organizations as a model that can work. That’s only if there is enough capital for the initial and ongoing investment.
Providers interested in developing a successful ACO should consider this initial plan to incorporate the strongest winning factors:
● Create an ACO primary care nucleus. A nucleus of primary care physicians is the core of an ACO.
○ Cost information available from Medicare, with permission by the practice, can help evaluate the potential contribution or risk of groups based on past quality reporting and cost history.
● Develop an ACO plan around 5,000-10,000 patients of those primary physician practices that will likely be successful and willing.
● Appoint physicians as leaders of the organization, regardless of whether a hospital organization or physician group is leading the charge on ACO development. Physicians are so central to the services that they are the best team to guide its development.
● Examine and measure existing referral patterns, which are likely based on traditional relationships as well as internal requirements for sending patients to employed specialists and technology services.
● Appoint a patient advisory board that participates in development and ongoing initiatives.
● Choose technology for population health, analytics, quality reporting and guidance of the ACO.
● Reach out to patients to determine communication preferences and establish introductory services to ACO.
● Establish materials for patients on cost and key initiatives that will help them understand what the ACO is, how they may benefit, and how to provide input as patients and participants.
Consider many of these activities as pre-ACO application tasks, for groups currently involved in the MIPS program.
In fact, using the four components of MIPS can help form the foundation: reviewing comparative costs, establishing population health and performance improvement, and creating quality registries for Medicare-specific populations along with all MIPS-eligible patients.
For organizations holding out on ACO development, start small and grow, using current data and infrastructure under MIPS as an ACO start-up.
A successful ACO requires the principals to side-step current culture and obstacles in order to develop a new design for care, powered by physicians and patients. For example, a multi-specialty group may need to consider dividing its business unit into separate entities of participating primary care physicians and specialty physicians, to align their economics with both ACO and their market.
A version of this post originally appeared on Roji Health Intelligence.
Founded as ICLOPS in 2002, Roji Health Intelligence guides health care systems, providers and patients on the path to better health through Solutions that help providers improve their value and succeed in Risk. Roji Health Intelligence is a CMS Qualified Clinical Data Registry.