How to Achieve Accountable Care While Avoiding Downfalls of Medicare ACOs

Most people in healthcare agree that the triple aim of accountable care organizations — increased quality of care, improved health of populations and reduced cost — are worthy goals that healthcare should focus on. How to reach these goals, on the other hand, is a question that garners many different answers. The Centers for Medicare and Medicaid Services' proposed Medicare ACOs have received much backlash from professional organizations and individuals criticizing its retrospective assignment of patients, number of quality metrics and shared savings rate, among other provisions. In fact, a survey conducted by U.S. News & World Report and Fidelity Investments found that while 33.2 percent of hospital executives said it is extremely likely their hospital will become part of an ACO, only 6.8 percent believe ACOs can improve quality and efficiency. In an effort to modify CMS' structure of ACOs while staying true to its triple aim, organizations have developed various pilot projects and models for integrated care, including patient-centered medical homes and private payor-provider relationships.

Accountable care
"Our point of view is that accountable care itself is something that is absolutely here to stay and [something] healthcare delivery organizations really need to get their arms around," says Jordan Battani, a principal researcher in CSC's Global Institute for Emerging Healthcare Practices, the applied research arm of CSC's Healthcare Group. Regardless of which model organizations choose, they should begin preparing for a transformation of the way care is delivered. "I don't think you can overemphasize the need for organizations to start thinking about [accountable care] and get themselves in motion," says Ms. Battani. "A prudent business decision would be to focus on the reimbursement requirements for these [accountable care] models; it's also very important not to get distracted by those, because they will change."

One way to prepare is to start aligning with other healthcare organizations, not only to streamline processes and create efficiencies, but also to access sufficient capital and other resources needed to create and sustain an accountable care model. "Providers need to understand and start preparing for the possibility that a significant amount of revenue not only for the commercial market, but also for Medicare and Medicaid, is going to come through some form of accountable payment methodology," says Rob Parke, a principal at consulting firm Milliman. Delivering high quality on a fixed budget "requires integration and infrastructure, which means you need to come together to accumulate capital," he says. Below, experts discuss the merits of different pay-for-performance models and how they compare to the Medicare ACO model as it is currently proposed.

Patient-centered medical homes
The patient-centered medical home is a model that may be relevant to health systems with employed primary care providers that are still working toward a fully integrated ACO. The PCMH model is currently being tested by CMS, and many private payors are embarking on initiatives based on this model as well.  The PCMH model is designed to refocus healthcare on primary care and the patient. "The patient-centered medical home is a set of principles and model of revitalizing primary care, which has become marginalized, under-resourced, disconnected and disempowered in nature, largely as a result of our current reimbursement schema," says David Nace, MD, vice president and medical director of RelayHealth, a division of McKesson, and vice chairman of the Patient-Centered Primary Care Collaborative board. Similar to the Medicare ACO model, the PCMH is centered around primary care. "The goal of the patient-centered primary care movement is to empower a robust, comprehensive, contemporary, continuous and connected primary care base that can serve as the cornerstone of a more accountable healthcare system," Dr. Nace says.  

The PCMH can meet some of the goals of the proposed Medicare ACO by using patient data to manage population health, following up with patients post-treatment and providing alternatives to costly emergency room or urgent care visits. As in the proposed Medicare ACOs, PCMHs use a team approach to care for the patient. In the PCMH model providers will remind patients of their medication regimen and other requirements to keep them out of the hospital. The medical home will also use evidence-based guidelines to deliver care. Unlike the Medicare ACO, however, the medical home does not have as many quality metrics providers need to meet in order to benefit from shared savings, a provision many organizations have spoken out against. Another potential benefit of PCMHs is less burnout in providers because they can spend more time with patients who truly need their services and direct patients who do not need their services to other resources, such as retail clinics.

The PCMH model may not replace the Medicare ACO model, but instead form a building block of the ACO or function as a separate entity that may introduce providers into the accountable care world. From this perspective, Medicare ACOs will function similarly to PCMHs, but on a larger scale. Mina Harkins, assistant vice president of recognition programs at the National Committee for Quality Assurance, says Medicare ACOs and PCMHs are "two separate things that work together quite well."

Because PCMHs work on a smaller scale than the proposed Medicare ACOs, they offer providers a way to begin their transition to a more comprehensive model of accountable care. Despite individually being smaller scale, Peggy Naas, MD, MBA, vice president of physician strategies at VHA, believes PCMHs may be more effective in aggregate at bending the cost curve than Medicare ACOs. "My concern is that the number of American healthcare providers who feel both capable of and willing to participate in Medicare shared savings programs with the current proposed rules and regulations is a very small subsection of our provider organizations. And therefore, it's going to provide, even if successful, a small bending of the total cost curve. It's not going to be the model that creates a fundamental shift in the majority of healthcare providers," says Dr. Naas. She believes PCMHs may be more attractive to providers because the medical home model seems more secure and less risky and still allows the building of accountable capabilities. "It's still challenging. It's not like people are picking an easy way out, but it's a little more predictable," she says.  

Private payor-provider relationships
Many private health insurance companies have begun partnering with hospitals and physicians to coordinate services and align incentives, which allows providers more flexibility than Medicare ACOs in negotiating terms such as shared savings rates, the population of patients and quality metrics. "The more sophisticated hospitals that take control of this [relationship] will be able to negotiate a more attractive deal for themselves because there's more flexibility. They will be able to structure deals in a way to help transform the organization over time rather than being locked into the model Medicare has chosen," Mr. Parke says. This greater flexibility may allow more healthcare providers to participate in accountable care because arrangements can be tailored to meet each provider's needs "rather than the one-size fits all Medicare shared savings plan," according to Mr. Parke. Arrangements with private payors can be designed around a certain episodes of care as opposed to the entire continuum of care and, in some cases, may offer greater financial reward. For example, sophisticated hospitals may profit more from entering into a bundled or capitated payment model compared to a shared savings model. Furthermore, private payor models can also involve a more diverse population and allow for prospective assignment of patients instead of retrospective assignment as the proposed Medicare ACO model would use.

An additional benefit of arrangements with private payors is easier access to resources needed to manage the health of populations. "Private payors already have in place some infrastructure that is required to be successful in an ACO-like model," Mr. Parke says. For instance, private payors can provide capital and technology for data analytics that can help providers track patients' health. "It's going to be very challenging for organizations trying to transform into [accountable care models] without the support of organizations to provide data and aid in a change in reimbursement," Raena Grant Akin-Deko, assistant vice president of product development for NCQA, says. "A lot [of organizations] are beginning to partner with health plans to provide data and differential reimbursement to build a sustainable model."

Although commercial payor arrangements can eliminate many of the downfalls of the proposed Medicare ACOs through its flexibility, the model still presents challenges to healthcare organizations. Providers and payors will have to form relationships differently than they have in the past. " One of the collaborative care models that has arisen is payor-provider realignment, which is usually found in areas where the performance of a health system is below national benchmarks, prompting payors and providers to work together in a more collaborative fashion than in the past in order to improve outcomes," says Todd Cozzens, CEO of Accountable Care Solutions at Optum. In addition to the challenge of relationships with payors, providers also need to manage the requirements of different payors it contracts with. "One of the struggles that Medicare is facing is that most providers in the community have relationships with and are reimbursed by many different payors. If one payor is asking them to do one thing and another something different, it's very hard to keep track of what all the initiatives are," Dr. Nace says. Leadership from Medicare, however, may allow for more consistency across payors. "The nice thing about Medicare is most of the private [payors] try to follow. Once Medicare does something, private initiatives start to do something. The key is can they align their approach," Dr. Nace says.

Future of healthcare delivery
Regardless of which model providers choose, it seems inevitable that healthcare organizations will need to practice accountable care to succeed. The needs of each organization will dictate how they adopt this principle — whether by participating in the Medicare ACO, a patient-centered medical home or a private payor ACO. Each accountable care model involves greater collaboration between providers across the continuum of care, greater coordination of care and the use of data to track population health. These changes will require a great deal of time and effort of healthcare providers.

"Hospitals are going to be challenged in this accountable care world to change their business model. In the current fee-for-service world, attracting specialists is the business model. Once they start shifting into an accountable care type world, [they will] need to transform into population-based thinking where primary care physicians become the [basis of the business model]," says Mr. Parke.

One of the challenges in any accountable care model is the implications of its success. "If this move to accountable care is successful, the need for hospital services will go down," Mr. Parke says. If organizations reach the goal of improving the health of populations, they will need to manage the effects of decreased demand for services. "If medical homes are really successful, there may be 20 percent fewer inpatient hospital admissions," Dr. Naas says. Hospitals will need to develop a plan for reallocating resources to accommodate a drop in admissions. However, hospitals are not likely to face this challenge soon because undergoing a change as significant as accountable care will be a long-term process. "It's taken us 50 plus years to get in this spiral of healthcare cost inflation and utilization patterns. It's not going to untangle itself in 3-5 years," Ms. Battani says. As the rules for the proposed Medicare ACO change and pilot projects release their results, healthcare leaders will need to adapt to new models of care that can reach the triple aim.

Related Articles on ACOs:

6 New ACO Developments
10 Potential Blunders by Providers in ACOs

Lawyers Have Problems with ACOs, Too

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