Accountable care organizations: How your practice can profit

ACOs can give your practice the opportunity to earn a bonus for high-quality, low-cost care. But it's also about who you ally with.

By Victoria Stagg Elliott — Posted Sept. 20, 2010

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Accountable care organizations are coming. You might not be sure what they are, yet you might have received a call from someone asking you to join one.

The accountable care organization hit the mainstream when, in its June 2009 report, the Medicare Payment Advisory Commission discussed the concept as a way to reduce costs and improve care for Medicare beneficiaries, going so far as to discuss whether physician membership in ACOs should be mandatory. (The AMA countered that such projects be voluntary for physicians.)

The health system reform law passed on March 23 directed CMS to begin demonstration projects to test ACO projects nationwide, the most prominent being the Medicare Shared Savings Program, scheduled to begin by Jan. 1, 2012. That allows physicians to sign up, voluntarily, for ACOs, which must consist of at least 5,000 Medicare patients, and must run for at least three years.

The only thing known about any bonus is that it will be an as-yet-determined percentage of the savings the ACO generate to CMS, based on its projection of targeted spending by the organization, and the amount of care it actually billed. Quality criteria also will be used to determine the bonus. Any bonus is paid to the ACO, which would disburse it to its members.

There is no penalty for exceeding target spending under the Medicare program, though that might not be the case for privately developed ACOs.

ACOs are not without financial risk to physicians. They might see a drop in income if the quality criteria aren't met, or lose any bonus in upfront investments in information technology or other items deemed necessary to become part of an ACO.

For the Medicare project, CMS has yet to iron out many of its details. The AMA is among the many organizations talking with CMS about the rules of ACOs, with the Association in particular emphasizing physician autonomy and flexibility, and ensuring that quality measures are reliable, objective and patient risk-adjusted.

But analysts say a sure thing is that the fee-for-service system, as constructed, is under attack, and that allying with fellow physicians and others in ACO might be a practical strategy to preserve, or even increase, income. And that's why there is so much scrambling right now among doctors, and hospitals, to get involved with ACOs.

"Payers are really looking toward value-based payments rather than fee-for-service payments," said Ken Bertka, MD, a family physician in Toledo, Ohio, and chair of the American Academy of Family Physicians' ACO task force.

For physicians, joining an ACO could mean not having to sell a practice to a large institution for financial survival, yet having the advantages of a large system. Experts say this means that primary care practices may do well in an ACO system, which has been described as turning the patient-centered medical home into a neighborhood. Accountable care adds the funding component that the patient-centered medical home model often has lacked.

"The patient-centered medical home is great, but it is limited to the practice level," said Dr. Bertka, who is on AAFP's board and is chief medical information officer of Mercy Health Partners in Toledo. "How do you take groups of practices and link them together? Most patients are cared for at several different practices. The challenge for a small practice is how do you link up with other practices and not just other physician practices but also hospitals and other clinicians?"

Much of the nitty-gritty has yet to be worked out, but experts say physicians should start thinking about how their practices may need to change if they want to be ready for the final rules, and be able to take advantage of possible bonuses.

"This doesn't necessarily mean that physicians have to be employed, but they are going to have to work together," Harold D. Miller, executive director of the Center for Healthcare Quality and Payment Reform in Pittsburgh, said July 12 at an American Medical Association seminar in Chicago. "We should not think that the only solution is large, integrated delivery systems. ... You want to have multiple models and have some degree of competition."

Those who work in this area say the first step is for physicians to think about the kinds of issues in their practice that incur the most significant health care costs and the connections that have the most potential to reduce them.

Making the right connections

For example, Summit Medical Group in Berkeley Heights, N.J., has been experimenting with the ACO model by sending nurses to patients' homes and geriatricians to nursing homes where some of their sickest patients live.

Summit is using computer registries to identify patients with diabetes whose disease is not controlled well. The patients are telephoned to schedule appointments to identify a means for improving their blood glucose numbers. As a result, the practice has found that patients' diabetes control has improved significantly.

"What [an ACO] really forces a physician to do is coordinate care and work together," said Robert W. Brenner, MD, Summit's chief medical officer. "We're trying to close the gap and provide for the full cycle of care."

But deciding whom to work with may be more difficult than picking physicians to refer patients to. An ACO needs to meet certain yet-to-be-determined metrics. Much of the quality data that can help a physician make those kind of decisions are not yet available.

"Some pieces exist, but not nearly enough," Miller said. "The data are being developed now. If you ask physicians about their utilization, they don't always know. Physicians all say they provide high-quality, conservative care and are usually surprised by their own numbers."

Physicians also need to think about how information will be tracked within the ACO.

"An electronic medical record can be very helpful, but they don't do all the things that are most critical to control cost and quality, such as patient registries," Miller said. "If an EMR does not get you information about a patient being hospitalized or going to the emergency department, it doesn't help you. A simple spreadsheet may be able to help you track what's going on with some of the high-utilization patient populations."

The next step is to think about what links with other parts of the health system in an ACO will look like. For instance, the move toward ACOs is one factor leading hospitals to be more interested in buying physician practices, or linking to them, and for this interest to be reciprocated. But there are many ways to connect.

"I think physicians can stay independent, but they will need some help. The biggest barrier to being an ACO is capital and resources," said family physician Gregory C. Reicks, DO, president of the Mesa County Physicians Independent Practice Assn. in Grand Junction, Colo. It has 265 doctors, 40% in primary care.

Other possibilities include group medical practices, networks of individual practices and partnerships, and joint venture arrangements between hospitals and health care professionals. The health system reform law allows for "other arrangements as deemed appropriate," which opens the door to more creative setups.

The legal issues that sometimes are a concern when physicians collaborate are expected to be less of an impediment.

The Federal Trade Commission, the Dept. of Health and Human Services' Office of Inspector General and the Centers for Medicare & Medicaid Services are hosting a workshop on this topic on Oct. 5 at the CMS headquarters office in Baltimore.

"If you join together to improve patient care and lower costs, not only will we leave you alone, we'll applaud you," Jon Leibowitz, FTC chair, said at the AMA Annual Meeting in June. "And we'll do everything we can to help you put together a plan that avoids antitrust pitfalls."

How a physician links with other parts of the health system in an ACO most likely will be determined by what is available in a particular area or personal preference, particularly with regard to autonomy.

Experts expect that many physician practices can maintain some independence, although those involved in early projects say some is lost, even if physicians are only loosely connected.

"It's a less autonomous style of practice," said Ed Murphy, MD, CEO of the Carilion Clinic in Roanoke, Va. "You go from being an independent practitioner taking care of the patient in front of you to an interdependent style of practice."

Carilion is participating in a pilot run by the Dartmouth Institute for Health Policy and Clinical Practice and the Engelberg Center for Health Care Reform at the Brookings Institution in Washington, D.C. It also plans to participate in the Medicare projects.

There are subtle differences between accountable care and capitation. Experts believe the differences between the two care models will make ACOs more likely to succeed.

For instance, in most ACO projects, physicians charge a fee for all services, but they are paid a bonus based on meeting various quality metrics and the amount of money saved. In addition, unlike the HMO model, which is declining in popularity, the Medicare ACO does not carry any insurance risk. However, some proposed ACO models do introduce that risk.

"We don't really know how it's going to work," said AAFP President Lori Heim, MD. "Right now, it's a theory."

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AMA hosts seminars on accountable care organizations, other payment models

The American Medical Association is continuing its seminar series to help prepare physicians for accountable care organizations and other aspects of health system reform. "Pathways to Success: What Physicians Need To Know About the Coming Revolution in Payment Practices" will be held Sept. 28 in New York City in conjunction with the Medical Society of the State of New York.

The event is open to physicians, their office staffs and those who work for organizations within the AMA House of Delegates. AMA members pay $195. The fee is higher for nonmembers.

Speakers include Harold D. Miller, executive director of the Center for Healthcare Quality and Payment Reform in Pittsburgh. He will explore new approaches to physician payment and delivery of care. David Hannan, MD, board member of the Greater Rochester Independent Practice Assn. and MSSNY's immediate past president, will discuss implementing a physician-led accountable care model. Attorney Jeffrey Ruggiero, a partner with Arnold & Porter in New York, will look at the legal issues for physicians working with hospitals on accountable care. AMA Immediate Past President J. James Rohack, MD, will discuss how physicians can take the lead in new payment models.

Registration is available on the AMA's website (link).

Another seminar, "Leadership Perspectives on Providing Accountable Care," will be held Nov. 5 in San Diego and hosted by the AMA Organized Medical Staff Section. The AMA House of Delegates Interim Meeting is scheduled for Nov. 6-9 in San Diego.

The seminar is free for AMA members; nonmembers will be charged a registration fee. Contact the AMA-OMSS at 800-262-3211, ext. 5622, for more information.

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What health system reform says about ACOs

Several private and government-sponsored accountable care organization pilot projects are under way, and the Patient Protection and Affordable Care Act calls for even greater implementation of this payment model.

How much of the health system reform law actually will play out remains to be seen, but here some key points it lays out about ACOs:

  • By Jan. 1, 2012, the Dept. of Health and Human Services will establish a shared savings program for Medicare Part A and B beneficiaries.
  • Groups of physicians and health care professionals may become ACOs eligible to receive payments on top of those received for usual services if they meet yet-to-be-determined performance standards. The standards will be elevated over time and adjusted according to several patient risk characteristics.
  • Entities that are eligible include group medical practices, networks of individual practices, partnerships or joint venture arrangements between hospitals and health care professionals, hospitals that employ physicians and other multiparty arrangements as deemed appropriate.
  • An ACO will need to define processes to promote evidence-based medicine and patient engagement, report on quality and cost measures, and coordinate care.
  • An ACO may be sanctioned if HHS determines that steps were taken to avoid higher-risk patients.
  • Qualifying ACOs need to provide care for a minimum of 5,000 beneficiaries and commit to at least three years of participation in the program.

By Jan. 1, 2012, HHS will establish the Pediatric Accountable Care Organization Demonstration Project.

Participating states will be authorized to allow those who provide care to children and adolescents and meet specified requirements to be recognized as an ACO similar to those established for patients on Medicare. This demonstration project will end Dec. 31, 2016.

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External links

American Medical Association on payment model resources for physicians (link)

Center for Healthcare Quality & Payment Reform on how to create accountable care organizations (link)

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