Specialty ACOs: The Next Step in Accountable Care

The concept of accountable care organizations — of payors and care providers working together to achieve the triple aim of lowering healthcare costs while improving the quality of care and patient outcomes — has mainly been focused on primary care since the idea was formalized by the Patient Protection and Affordable Care Act in 2010.

Lately, however, the focus of ACOs has shifted slightly from primary care to specific chronic diseases, such as cancer, chronic kidney disease and end stage renal disease.

After all, there are major cost savings to be had in chronic disease management. For example, just 1.3 percent of Medicare patients have end stage renal disease, but they account for 7.5 percent of annual Medicare spending, according to the United States Renal Data System's 2012 report. Also, in 2010, cancer care cost the nation $124.6 billion, according to the National Cancer Institute, and that number is expected to grow: the National Institutes of Health has projected national cancer costs will reach $158 billion by 2020.

"Because of the scale of the cost, small changes can really move the meter," says Jacob Goldstein, vice president of ambulatory programs for Arcadia Solutions. "Small percentage points of savings in a specialty role can provide significant return."

Therefore, utilizing an ACO-like structure beyond primary care has the potential to save the nation a lot of money while improving the quality of care provided to these chronically ill patient populations.

Current situation

Providing low-cost, high-quality specialty care can be hard on a traditional ACO's budget, since managing the cost of care in those situations is difficult. "One or two high-cost episodes can blow [an ACO's] budget," says Brett Hickman, a partner in PwC's Health Industries Advisory Practice.

That's why ACOs are currently managing high-risk patient populations by contracting treatment out to specialty practices in the area. For example, Phoenix-based Southwest Kidney Institute works that way with Banner Health's ACO. "When Banner became an ACO, they decided to reach out," says Gurdev Singh, MD, vice president of finance and executive board member of SWKI. "Based on our close relationship with them, we both felt we could truly help each other achieve the goals of an ACO given the existing relationship and sharing of the philosophies between us."

Under the agreement with Banner, SWKI, a nephrology group with 35 physicians, is a part of Banner's risk-baring Pioneer ACO agreement. SWKI is also involved with other ACOs and integrated care models in the area.

"That arrangement is becoming more and more common as organizations are getting their beneficiary list and have patients with a high propensity to those diseases," Mr. Goldstein says, because large specialty groups typically do a better job managing the cost of patient care.

A step further: contracting with payors

While many specialty groups are providing care for patients by working with primary care ACOs in their area, some groups are going a step further and signing contracts with payors to form their own, disease-specific ACOs.

For example, insurer Florida Blue formed two oncology ACOs in 2012: one with Tampa, Fla.-based Moffitt Cancer Center and another with Coral Gables, Fla.-based Baptist Health South Florida and an oncology group. "Oncology costs are the biggest cost driver in Florida," says Jon Gavras, MD, CMO of Florida Blue, of why the insurer sought out the new model. "We figured we would address the hard one first."

CMS is also getting into the disease-specific ACO space. In February, CMS announced its Comprehensive ESRD Care initiative, which is essentially a coordinated care program, similar to its ACO program, but specific to end stage renal disease.

How the model works

Current specialty ACOs, like the organizations Florida Blue has put together, are set up in a similar fashion to the nation's primary care ACOs. If providers succeed in improving on several quality metrics, such as reducing readmissions and overall drug costs, they can share in the financial gain.

The ESRD ACO program set up by CMS also has a similar format to primary care ACOs. The provider groups will be evaluated on their performance on quality measures and can then share in Medicare savings with CMS if they meet those metrics.

Of course, there are some differences between the two styles of ACOs. For example, there is a large focus on providing evidence-based care in an oncology ACO. "We designed our own clinical pathways…that reflect how we deliver care. They are specific steps to take with each type of cancer," explains Janene Culumber, CPA, senior vice president of finance and CFO at Moffitt.

Obstacles to success

The specialty ACO model is in its infant stage, and there are many obstacles the model has to overcome in order to be successful for patients, providers and payors.

Size
When it comes to the success of a disease-specific ACO, the size of the practice involved and its patient base matters.

Because many chronic diseases typically have low patient volume, the patient base for some practices may be too small to work in an ACO model. "When you talk about a purely disease-focused ACO, the populations will be a little smaller. The population doesn't have enough members to bare the risk out," Mr. Goldstein says. "Without a larger population, it's going to be hard to make it out ahead [financially]."

Some specialty groups already have large, established patient bases, and those are the organizations currently stepping out into this space. For example, Moffitt serves hundreds of thousands of patients each year and is well established in its market.

But not every practice has a well-established patient base. Therefore, Mr. Goldstein predicts a stage of aggregation and collaboration before the model garners wide-spread popularity. During this stage, specialty providers would come together to form a larger patient base and also gather the data necessary to succeed in an ACO.

Southwest Kidney Institute is interested in the CMS ESRD initiative, because the group is passionate about providing patient-centered, value-based care. So, the nephrology group is working with others in its market and athenahealth to pool data in one warehouse for better future leverage with payors. "There are not too many [groups] that are big in size to be prepared for an ACO," Dr. Singh says. By pooling all of the groups' data into one warehouse and working together, the groups achieve a larger patient base, which is necessary for success, and also become more attractive to payors.

Collaboration
After the specialty ACO format is nailed down, the new organizations will have to somehow work with existing primary care ACOs to provide care to chronically ill patients. "I think there is an ongoing debate right now as to who is accountable for a patient," Mr. Goldstein says. "It is going to need to be made clear who the primary [physician] is and who is secondary. The primary physician [for a patient] could be the specialist."

It has not yet been determined how this collaboration will work between primary care ACOs and disease-specific ACOs, since the latter model is so new, but it is certain that the groups must work together to keep patients healthy, which could prove to be a power struggle.

The future

The disease-specific or specialty ACO model is still in development stages and is slowly gaining in popularity with providers and payors. However, many payors are still primarily developing relationships with providers to form primary care ACOs, even payors that have already entered the specialty ACO field. "We're looking to be focused on total cost of care ACOs," says Dr. Gavras with Florida Blue, but he adds that if a "specific opportunity" arises, the payor is open to more specialty ACOs.

But, ultimately, disease-specific ACOs hold great promise of cost savings and improved care, especially in oncology and ESRD. "Directionally, it looks very promising from a quality and cost standpoint," Dr. Gavras says. With that promise, as well as guidance from the CMS ESRD program, the model is poised to grow in popularity throughout 2013.

More Articles on ACOs:

Number of ACOs in the United States — A Quarterly Breakdown
ACO Data on the Cloud
Specialists Can Get Caught in ACO Web of "Primary Care" and Exclusivity

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