ACOs can work with physicians in charge

A hospital partner may not be necessary for an accountable care organization to be effective, according to a report analyzing a primary care-led ACO.

Physicians increasingly are selling their practices to hospitals, which are buying in preparation for the development of ACOs and other aspects of health system reform. People who work in this area are holding up the subject of the journal's case report -- WellMed Medical Management in San Antonio -- as an example of how an ACO can work without a hospital partner, serve more than the minimum 5,000 Medicare patients mandated by the Patient Protection and Affordable Care Act for ACO designation, and achieve positive results.

"WellMed is the only example I know of a primary care-based ACO. Most people are trying to tie ACOs to hospitals, and WellMed is a great example of how it can be done otherwise," said Robert Phillips Jr., MD, MSPH, lead author and director of the American Academy of Family Physicians' Robert Graham Center. The report was published in the January/March issue of The Journal of Ambulatory Care Management.

WellMed, which is organized around the medical home model, has 21 primary care clinics that serve thousands of people age 65 and older. The WellMed Medical Group has rheumatologists, dermatologists, cardiologists, hospitalists and podiatrists on staff, but all other specialty and hospital services are contracted out.

"It's not a foregone conclusion that the successful ACO of the future is going to come out of a hospital or hospital system," said F. Douglas Carr, MD, medical director of education and system initiatives at the Billings Clinic in Montana, a multispecialty practice that has its own hospital. It was not part of the WellMed study. Dr. Carr directed the 280-physician practice's participation in the Medicare Physician Group Practice Demonstration. Information gleaned from the program formed the basis for ACOs' inclusion in health system reform legislation.

Costs, hospital stays also cut

The case study documented that WellMed's patients had a lower death rate than those in the same age group in Texas. Subsequent papers are expected to show notable reductions in the length of hospital stays and the cost of care.

"We feel that physicians can create organizations to manage care and control costs without a hospital," said Gary Piefer, MD, chief medical officer at WellMed Medical Management.

The research, which was funded by the Agency for Healthcare Research and Quality, found that WellMed patients age 65 to 74 had a death rate of 9.7 per thousand in 2007. The death rate for the age group in Texas that year was 20.8 per thousand. For people age 75 and older, the death rate was 40.7 for WellMed patients and 77.3 for Texas residents.

Although WellMed has had significant success, those working on the issue question how applicable the findings of the case study are to other settings and payment structures. Many WellMed patients are enrolled in a Medicare Advantage HMO, and physicians are paid a salary with a bonus based on meeting quality measures. The Medicare Shared Savings program due to launch by Jan. 1, 2012, will allow physicians to collect the usual fees for services and qualify to collect a proportion of any savings if yet-to-be-determined performance standards are met. WellMed doctors have an average panel of 480 patients, far fewer than the average primary care physician.

"The medical home is a critical building block needed in the construction of the full complement of the ACO that includes the added care tiers of primary, secondary, tertiary care and beyond," said Sam Lin, MD, PhD, medical affairs consultant with the American Medical Group Assn. "But what works for WellMed may not necessarily be replicated by another organization."

WellMed has a no-cost transportation program to get patients to their medical appointments and provides them with portable electronic devices that can access their medical records. Experts say many primary care medical practices do not have the capital for these programs and may need a hospital for help.

"Primary care physicians can be in the driver's seat, but the problem is that an ACO is going to require information technology system and a fairly good layer of management," Billings Clinic's Dr. Carr said. "Doctors historically have not been willing to take risks in terms of assuming the capital requirements of doing that."

A different approach

Though WellMed's model may be difficult to replicate for many practices, experts say the key message is that working closely with a hospital may not be the only way to form an ACO. A perspective piece in the Dec. 30, 2010, issue of The New England Journal of Medicine said, "Whoever controls the ACOs will capture the largest share of any savings."

The article said barriers to physician-run ACOs include fighting over savings, determining whether certain procedures are necessary and assembling enough physicians, with 95% of practice physicians being in groups of five doctors or fewer. Hospitals have the size and the capital to spend on technology, but the article said they will face short-term income cuts from fewer procedures, and many have struggled to run physician operations.

"It is unlikely that one of these ACO models will dominate throughout the country; local market conditions will influence which one prevails in each community," wrote the authors, which included Robert Kocher, MD, a senior fellow at the Brookings Institution and a former special assistant to President Obama on the National Economic Council.

"In geographic areas where the physician base is fragmented and physicians are unlikely to collaborate or where there are already well-established hospital-based health systems, hospitals are likely to dominate. In areas that have well-functioning physician groups, with working IT systems and effective management systems, physician dominance seems more likely. In many other markets, the future is open."

Meanwhile, hundreds of organizations representing physicians and hospitals have submitted comments hoping to influence the rules the Centers for Medicare & Medicaid Services is drafting on this subject.

"The ACO is a moving target," said internist James Lee, MD, medical director for hospital kaizen (efficiency) at the Everett Clinic in Washington state who led the system's participation in the Medicare Physician Group Practice Demonstration. "The exact form, who will be involved in a successful medical home model and the appropriate financing -- these are all open questions."

The American Medical Association adopted ACO principles on Nov. 9, 2010, at its Interim Meeting in San Diego. The Association submitted comments on the issue on Dec. 2, 2010, and is advocating that participation by physicians be voluntary and that barriers for small practices to participate be eliminated.

"The AMA is committed to ensuring all physicians, regardless of their practice size, can lead and participate successfully in new models of care," said AMA President Cecil B. Wilson, MD. "We encourage the development of physician-led models of care, such as WellMed in Texas, as well as studies so others can learn from the experience of these organizations."

The Association has asked the Federal Trade Commission for relief from antitrust rules to allow small practices to collaborate in an ACO more easily while maintaining their independence.