The March to Accountable Care Organizations—How Will Rural Fare?

Purpose: This article describes a strategy for rural providers, communities, and policy makers to support or establish accountable care organizations (ACOs). Methods: ACOs represent a new health care delivery and provider payment system designed to improve clinical quality and control costs. The Patient Protection and Affordable Care Act (ACA) makes contracts with ACOs a permanent option under Medicare. This article explores ACA implications, using the literature to describe successful integrated health care organizations that will likely become the first ACOs. Previous research studying rural managed care organizations found rural success stories that can inform the ACO discussion. Findings: Preconditions for success as ACOs include enrolling a minimum number of patients to manage financial risk and implementing medical care policies and programs to improve quality. Rural managed care organizations succeeded because of care management experience, nonprofit status, and strong local leadership focused on improving the health of the population served. Conclusions: Rural provider participation in ACOs will require collaboration among rural providers and with larger, often urban, health care systems. Rural providers should strengthen their negotiation capacities by developing rural provider networks, understanding large health system motivations, and adopting best practices in clinical management. Rural communities should generate programs that motivate their populations to achieve and maintain optimum health status. Policy makers should develop rural‐relevant ACO‐performance measures and provide necessary technical assistance to rural providers and organizations.     

Are ACOs the Answer to High-Value Healthcare?

Background

The Patient Protection and Affordable Care Act required the Secretary of the Department of Health and Human Services to establish the Medicare Shared Savings Program (MSSP) by January 1, 2012. The MSSP is intended to encourage physicians, hospitals, and other providers and suppliers to form accountable care organizations (ACOs) to provide cost-effective, coordinated care to Medicare beneficiaries. Under the MSSP, ACOs can qualify for additional payments by meeting specific savings benchmarks and quality measures.

Objectives

To review the anticipated changes in the role and responsibilities of ACOs and to evaluate the challenges and opportunities that various healthcare stakeholders, including patients, providers, and payers, will encounter with the launching of the new MSSP.

Discussion

ACOs assume responsibility for overall care, cost, and quality of patient care. The MSSP will provide ACOs additional payments for meeting cost-savings and quality benchmarks. The extra savings will be shared with participating providers based on different risk-sharing options. As the MSSP and new ACOs launch, stakeholders will be impacted differently. This article is based, in part, on responses of approximately 100 payers to a survey conducted in June 2011 by Xcenda. Each stakeholder group, including providers, payers, patients, and manufacturers, must monitor the reactions and relationships between all players in the care continuum. Providers will have to achieve a greater level of coordination and collaboration than typically exists today. Government and commercial payers will have a role in determining how quickly they will adopt accountable care models. Patients are expected to become more engaged and participatory in their care to achieve optimal outcomes, and manufacturers will be required to prove the value of their products given the clinical value proposition embedded in accountable care models.

Conclusion

Whether ACOs are the answer to providing higher-quality healthcare at lower costs remains unclear. All signs, however, point toward a systemic change in an effort to improve patient care and contain healthcare costs. It will be important for all healthcare stakeholders to understand the roles that ACOs will play in ensuring access to care and quality of care.Section 3022 of the Patient Protection and Affordable Care Act of 2010 (ACA) calls for the Department of Health and Human Services to create the Medicare Shared Savings Program (MSSP) and other pilot programs to reduce healthcare costs while improving the quality of care.1 The ACA requires the Centers for Medicare & Medicaid Services (CMS) to launch the MSSP by January 1, 2012.2Accountable care organizations (ACOs)—an arrangement among healthcare providers “who collectively agree to accept accountability for the cost and quality of care delivered to a specific set of patients”3—were envisioned by the ACA as a vehicle for physicians, hospitals, and other providers to provide cost-effective, coordinated care to Medicare beneficiaries. The MSSP will create for healthcare professionals a framework for sharing risk, which, in turn, will supply financial incentives for integrated care.CMS released its proposed rule on ACOs and the MSSP on March 31, 2011, and subsequently, the Center for Medicare & Medicaid Innovation (CMMI) announced an alternative, non–MSSP-affiliated pathway to establishing ACOs called the Pioneer ACO Model.4 After the initial proposed rule received strong criticism across the healthcare community, CMS released its final ruling on ACOs and the MSSP on October 20, 2011, which included significant changes aimed at making participation in ACOs more attractive to providers.2 Under the MSSP and the Pioneer program, providers in ACOs will continue to receive fee-for-service (FFS) payments from Medicare for their individual services.4 However, providers will have the opportunity to receive additional bonus payments if their ACOs meet savings benchmarks and quality measures set by CMS.2

KEY POINTS

• ▸ The Medicare Shared Savings Program (MSSP) that will take effect in January 2012 is intended to complement the formation of accountable care organizations (ACOs).
• ▸ ACOs rely on increased stakeholder collaboration, which should help improve care quality and bring overall costs down.
• ▸ Based on a June 2011 survey of nearly 100 payer decision makers representing more than 200 million covered members, 61% of payers are already contracting with ACOs or are planning to do so in the near future.
• ▸ Under the MSSP, providers will continue to receive fee-for-service payments from Medicare, but will have opportunities to get additional payments if their ACO meets savings benchmarks.
• ▸ Patients will be empowered with access to competitive networks of providers offering quality healthcare at relatively lower costs; this is likely to foster competition among ACOs and drive performance up.
• ▸ Private payers are expected to test different methods of payments to ACOs and may also join independent, non–MSSP-affiliated ACOs.
• ▸ The first-year costs for starting an ACO are estimated at $1.75 million.

Even before CMS released its final MSSP-related ACO regulation, the move toward accountable and more integrated care—with the concept of shared savings between payers and providers—began gaining momentum. Hospitals, physicians, and health plans have already formed or are contracting with ACOs.5In June 2011, Xcenda''s payer market research platform, the Managed Care Network (MCN), conducted a survey of its panel members, consisting of nearly 100 payer decision makers representing more than 200 million covered members.5 They were asked to identify whether their organizations were contracting with ACOs, planning to contract, or not planning to contract ACOs within the next 12 months. Based on the MCN panel responses to this survey, 61% of payers are already contracting with ACOs or are planning to contract with them within the next year (Figure 1).5Open in a separate windowFigure 1Payers'' Plans to Contract with ACOsACOs indicates accountable care organizations.NOTE: These data reflect responses to a June 2011 survey of nearly 100 payers responsible for >200 million covered members.5With the formation of ACOs, payers and providers are creating a new healthcare delivery model that will test value-based and quality-based reimbursement mechanisms. The growth of ACOs, along with a focus on the delivery of increased quality of care at lower costs, will require each sector of healthcare to understand how ACOs will affect all stakeholders, including patients, providers, payers, and manufacturers. This article focuses on the implications for these stakeholders of implementing ACOs and the imminent launch of the MSSP.     

Why are ACOs doomed for failure?

Among the more ambitious parts of the Patient Protection and Affordable Care Act (2010) is the formation of Accountable Care Organizations (ACOs) that offer fiscal rewards when well-organized, integrated hospital-physician groups can improve quality of care and reduce the cost of Medicare expenditures. After studying the conceptual and operational issues, it is concluded herein that ACOs are in the long-haul doomed for failure since: 1) most hospitals and physicians have major difficulties in consummating tightly coordinated collaborative efforts; 2) providers historically have had a dismal track record in reducing cost, because of existing fee-for-service incentives; and 3) existing regulations do not provide sufficient fiscal rewards to assume the cost of starting an ACO and its possible operational risks.     

Accountable Care Organizations: roles and opportunities for hospitals

Federal health reform has established Medicare Accountable Care Organizations (ACOs) as a new program, and some states and private payers have been independently developing ACO pilot projects. The objective is to hold provider groups accountable for the quality and cost of care to a population. The financial models for providers generally build off of shared savings between the payers and providers or some type of global payment that includes the possibility of partial or full capitation. For ACOs to achieve the same outcomes with lower costs or, better yet, improved outcomes with the same or lower costs, the delivery system will need to become more oriented toward primary care and care coordination than is currently the case. Providers of clinical services, in order to be more effective, efficient, and coordinated, will need to be supported by a variety of shared services, such as off-hours care, easy access to specialties, and information exchanges. These services can be organized by an ACO as a medical neighborhood or community. Hospitals, because they have a management structure, history of developing programs and services, and accessibility 24/7/365, are logical leaders of this enhancement of health care delivery for populations and other providers.     

Accountable Care Organizations: Roles and Opportunities for Hospitals

Abstract

Federal health reform has established Medicare Accountable Care Organizations (ACOs) as a new program, and some states and private payers have been independently developing ACO pilot projects. The objective is to hold provider groups accountable for the quality and cost of care to a population. The financial models for providers generally build off of shared savings between the payers and providers or some type of global payment that includes the possibility of partial or full capitation. For ACOs to achieve the same outcomes with lower costs or, better yet, improved outcomes with the same or lower costs, the delivery system will need to become more oriented toward primary care and care coordination than is currently the case. Providers of clinical services, in order to be more effective, efficient, and coordinated, will need to be supported by a variety of shared services, such as off-hours care, easy access to specialties, and information exchanges. These services can be organized by an ACO as a medical neighborhood or community. Hospitals, because they have a management structure, history of developing programs and services, and accessibility 24/7/365, are logical leaders of this enhancement of health care delivery for populations and other providers.     

The Economics of Medicare Accountable Care Organizations

Background

Accountable care organizations (ACOs) have been created to improve patient care, enhance population health, and reduce costs. Medicare in particular has focused on ACOs as a primary device to improve quality and reduce costs.

Objective

To examine whether the current Medicare ACOs are likely to be successful.

Discussion

Patients receiving care in ACOs have little incentive to use low-cost quality providers. Furthermore, the start-up costs of ACOs for providers are high, contributing to the minimal financial success of ACOs. We review issues such as reducing readmissions, palliative care, and the difficulty in coordinating care, which are major cost drivers. There are mixed incentives facing hospital-controlled ACOs, whereas physician-controlled ACOs could play hospitals against each other to obtain high quality and cost reductions. This discussion also considers whether the current structure of ACOs is likely to be successful.

Conclusion

The question remains whether Medicare ACOs can achieve the Triple Aim of “improving the experience of care, improving the health of populations, and reducing per capita costs of health care.” Care coordination in ACOs and information technology are proving more complicated and expensive to implement than anticipated. Even if ACOs can decrease healthcare costs and increase quality, it is unclear if the current incentives system can achieve these objectives. A better public policy may be to implement a system that encompasses the best practices of successful private integrated systems rather than promoting ACOs.     

Medical Staff Counselors Aid Nursing Students

The authors sought to explore the implications of the Patient Protection and Affordable Care Act's establishment of Accountable Care Organizations (ACO). Summit participants, who discussed best practices and issues to be addressed when designing and implementing ACOs. Healthcare leaders from across the country in charge of running, developing, and/or implementing ACOs for health systems. Participants were asked to consider the challenges, benefits, and strategies to ACO implementation.     

Accountable care organizations: the case for flexible partnerships between health plans and providers

Under the Affordable Care Act, the new Center for Medicare and Medicaid Innovation will guide a number of experimental programs in health care payment and delivery. Among the most ambitious of the reform models is the accountable care organization (ACO), which will offer providers economic rewards if they can reduce Medicare's cost growth in their communities. However, the dismal history of provider-led attempts to manage costs suggests that this program is unlikely to accomplish its objectives. What's more, if ACOs foster more market concentration among providers, they have the potential to shift costs onto private insurers. This paper proposes a more flexible payment model for providers and private insurers that would divide health care services into three categories: long-term, low-intensity primary care; unscheduled care, including unscheduled emergency services; and major clinical interventions that usually involve hospitalization or organized outpatient care. Each category of care would be paid for differently, with each containing different elements of financial risk for the providers. Health plans would then be encouraged to provide logistical and analytic support to providers in managing health costs in these categories.     

The Case for Enrolling High-Cost Patients in an ACO

Though accountable care organizations (ACOs) are increasingly important to American healthcare, ethical inquiry into ACOs remains in its nascent stages. Several articles have raised the concern that ACOs have an incentive to avoid enrolling high-cost patients and, thereby, have an incentive to deny care to those who need it the most. This concern is borne out by the reports of consultants working with newly formed ACOs. This paper argues that, contra initial appearances, there is no financial incentive for ACOs to avoid enrolling high-cost patients.     

Primary Care Groups and NHS Rationing: Implications of the Child B Case

Implementing The new NHS and the 1997 NHS (Primary Care) Act will gradually extend cash-limiting into primary health care, especially general practice. UK policy-makers have avoided providing clear, unambivalent direction about how to 'ration' NHS resources. The 'Child B' case became an epitome of public debate about NHS rationing. Among many other decision-making processes which occurred, Cambridge and Huntingdon Health Authority applied an ethical code to this rationing decision. Using new data this paper analyses the rationing criteria NHS managers and clinicians used at local level in the Child B case; and the organisational structures which confronted them with such decisions. Primary Care Groups are likely to confront similar rationing decisions in respect of 'gate-kept' NHS services. However, such rationing processes are not so easily transposed to open-access services such as general practice. NHS rationing decisions, especially in PCGs, will require a much more specific ethical code than hitherto used. This revised version was published online in July 2006 with corrections to the Cover Date.     

Modeling and designing health care payment innovations for medical imaging

Payment innovations that better align incentives in health care are a promising approach to reduce health care costs and improve quality of care. Designing effective payment systems, however, is challenging due to the complexity of the health care system with its many stakeholders and their often conflicting objectives. There is a lack of mathematical models that can comprehensively capture and efficiently analyze the complex, multi-level interactions and thereby predict the effect of new payment systems on stakeholder decisions and system-wide outcomes. To address the need for multi-level health care models, we apply multiscale decision theory (MSDT) and build upon its recent advances. In this paper, we specifically study the Medicare Shared Savings Program (MSSP) for Accountable Care Organizations (ACOs) and determine how this incentive program affects computed tomography (CT) use, and how it could be redesigned to minimize unnecessary CT scans. The model captures the multi-level interactions, decisions and outcomes for the key stakeholders, i.e., the payer, ACO, hospital, primary care physicians, radiologists and patients. Their interdependent decisions are analyzed game theoretically, and equilibrium solutions - which represent stakeholders’ normative decision responses - are derived. Our results provide decision-making insights for the payer on how to improve MSSP, for ACOs on how to distribute MSSP incentives among their members, and for hospitals on whether to invest in new CT imaging systems.     

The challenges ahead for accountable care organizations (ACOs)

Although offering financial incentives to both physicians and healthcare organizations, accountable care organizations (ACOs) are designed to not only offer quality patient care, but keep costs down as well. The law states that an ACO must manage all of the healthcare needs for a minimum of 3 years for at least 5000 Medicare beneficiaries. In January 2012, the first round of applications for the ACO Shared Savings Program were accepted. Practices and insurers have already begun setting up and announcing plans to create ACOs. By making providers equally responsible for their respective patients while giving financial incentives to avoid unnecessary procedures, ACOs aim to raise the quality of patient care. However, there are growing questions and concerns with the start date approaching. For instance, will the insurers, doctors, or hospitals be in charge? What are the legal concerns? How will patient care change? To listen to the full panel discussion visit: http://www.ajmc.com/panel-discussions/accountable-care-organizations.     

Accountable care organizations: principles and implications for hospital administrators

With the passage of the Affordable Care Act (ACA) in 2010, broad agreement has been reached on the need for fundamental reform of healthcare delivery and payment systems. Accountable care organizations (ACOs) have become one of the most discussed provisions of the ACA, and Medicare's Shared Savings Program (SSP), the incentive program tied to ACOs, has the potential to change the delivery of healthcare. The SSP will attempt to improve the quality of care while reducing the growth in expenditures by encouraging the formation of ACOs. The SSP is voluntary, and organizations that wish to participate will encounter advantages and disadvantages in its adoption. This article provides hospital administrators with basic information about the ACO requirements set forth by the Centers for Medicare & Medicaid Services and helps frame decision making about hospital participation in ACOs.     

Ethical Considerations in Disease Management

Managed care, with its restrictions on patient and provider autonomy, has dominated the delivery of healthcare in the US over the last decade. The latest model of managed care has focused on disease management programs, which outline optimal cost-effective processes for care, built on evidence-based guidelines. Patients and providers seem to be more accepting of these programs than of the restrictive managed care practices, but ethical dilemmas remain for both patients and providers when participating in such programs. The basic ethical tenets of beneficence (to do good), autonomy (to make one’s own decisions) and non-maleficence (to do no harm), have been well accepted by the medical community. Under managed care these basic tenets have been challenged, with a notable impact on the principle of autonomy; patients lose their choices in selecting care providers, while healthcare providers face restrictions on what pharmaceutical agents they can prescribe and how to care for patients.Additionally, the changing nature of managing care has highlighted conflicts of interest between: patients and the providers of healthcare; patients and the implementers of health plans; and providers and health plans. Conflicts of interest between various parties involved in healthcare challenge the fundamentals of ethical principles, particularly autonomy and beneficence.Recently, there has been greater recognition of the ethical notion of social justice (including the competing concepts of distributive and contributive justice), in terms of the provision of healthcare, partly due to the development of concerns over the expense of, and access to, healthcare. Distributive justice reflects the broader societal concerns over the provision of scarce resources for all citizens, and argues for universal coverage schemes. The concept of contributive justice recognizes that principles of equity demand that we allocate commonly collective funds fairly to those who have contributed to the pool of funds; in the realm of healthcare in the US this is particularly relevant for those who have insurance coverage.Disease management programs offer great potential to improve healthcare. Programs that are developed with attention paid to the principles of beneficence and social justice as well as to concerns regarding patient and provider autonomy can limit conflicts of self-interest.     

The forgotten players in ACO development: nursing homes

Given the history and dynamics of the Patient Protection and Affordable Care Act, nursing homes have been left out of the business of Accountable Care Organization (ACO) development and implementation over the last year. Only now are ACOs, hospitals, and physicians realizing that an effective ACO needs long-term care and rehabilitation as a key component to maximize shared savings in the ACO environment. This article discusses the history of ACO development, examines why nursing homes may have been left out, and explains why nursing homes are critical participants in ACO effectiveness. The article also discusses how nursing homes will need to position their businesses for ACO participation.     

An agent-based simulation model to study accountable care organizations

Creating accountable care organizations (ACOs) has been widely discussed as a strategy to control rapidly rising healthcare costs and improve quality of care; however, building an effective ACO is a complex process involving multiple stakeholders (payers, providers, patients) with their own interests. Also, implementation of an ACO is costly in terms of time and money. Immature design could cause safety hazards. Therefore, there is a need for analytical model-based decision-support tools that can predict the outcomes of different strategies to facilitate ACO design and implementation. In this study, an agent-based simulation model was developed to study ACOs that considers payers, healthcare providers, and patients as agents under the shared saving payment model of care for congestive heart failure (CHF), one of the most expensive causes of sometimes preventable hospitalizations. The agent-based simulation model has identified the critical determinants for the payment model design that can motivate provider behavior changes to achieve maximum financial and quality outcomes of an ACO. The results show nonlinear provider behavior change patterns corresponding to changes in payment model designs. The outcomes vary by providers with different quality or financial priorities, and are most sensitive to the cost-effectiveness of CHF interventions that an ACO implements. This study demonstrates an increasingly important method to construct a healthcare system analytics model that can help inform health policy and healthcare management decisions. The study also points out that the likely success of an ACO is interdependent with payment model design, provider characteristics, and cost and effectiveness of healthcare interventions.     

How report cards on physicians, physician groups, and hospitals can have greater impact on consumer choices

Public report cards with quality and cost information on physicians, physician groups, and hospital providers have proliferated in recent years. However, many of these report cards are difficult for consumers to interpret and have had little impact on the provider choices consumers are making. To gain a more focused understanding of why these reports cards have not been more successful and what improvements could be made, we interviewed experts and surveyed registrants at the March 2011 AHRQ National Summit on Public Reporting for Consumers in Health Care. We found broad agreement that public reporting has been disconnected from consumer decisions about providers because of weaknesses in report card content, design, and accessibility. Policy makers have an opportunity to change the landscape of public reporting by taking advantage of advances in measurement, data collection, and information technology to deliver a more consumer-centered report card. Overcoming the constraint of limited public funding, and achieving the acceptance of providers, is critical to realizing future success.     

The ACO paradox impacting physicians

Accountable care organizations (ACOs) would hold care providers jointly accountable for the quality and costs of care, allow consumers the freedom to choose their providers, and involve physicians and consumers in their shared decision-making. Even though the ACO model proposes physician empowerment, it also poses significant financial and change-management challenges for physicians. Furthermore, the "patient-centered" ACOs that have been established to safeguard consumer sovereignty pose the risks of concentrating healthcare markets further and exacerbating the existing disparities in healthcare. We conducted a survey study to understand physicians' perspectives of ACOs by seeking their first-hand feedback. The survey results suggest that there are significant communication gaps between physicians and healthcare administrators; and efficient communication can help improve physician-administrator alignment and help them identify opportunities that would be critical to the success of ACOs.     

Can governments push providers to collaborate? A comparison of hospital network reforms in France and the United States

France recently implemented a program to encourage greater collaboration among public hospitals, which represent about 65 percent of total capacity, by placing them into regional groupings known as Groupements Hospitalier Territoire (GHTs) and mandating that facilities within them share several core functions. The strategy echoes that of Accountable Care Organizations (ACOs) in the United States, which offer financial incentives to providers to form networks that foster collaboration. While the programs share an underlying strategy for improving care and reducing costs, the difference in approaches, mandatory versus voluntary, could significantly affect outcomes. We analyzed aspects of the programs that could lead to differences in their results. ACOs appear to have several advantages, as financial inducements have proven effective in shaping provider behavior in other contexts. GHTs may benefit from a more direct approach, but mandatory participation risks pushback. Regardless of whether the programs succeed in fostering effective care integration, they may accelerate provider consolidation, which could impair access in already underserved areas by concentrating resources in larger facilities and promoting the closure of smaller ones.