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Uh Oh: ACOs – Accountable Care Organizations

8 Oct 2014

Accountable Care Organizations (ACOs) represent the Affordable Care Act’s (ACA) effort to reorganize the payment and delivery of medical services, but saddles caregivers with the job of electronically coordinating treatment among themselves.

Through mechanisms such as ACOs and the “Meaningful Use” program, the ACA is moving healthcare away from a fee-for-service service model that compensates more treatment rather than less.

The ACO model’s raison d’être is taking cost out of the system. Its challenge: getting those who benefit from that cost to shed it. ACOs replace volume targets with others that enhance “value” by treating a patient along a continuum of care that is monitored electronically for quality.

ACOs proffer an era of “population health management,” which entails analysis of the causes that lead patients to emergency rooms and diverting them to lower-cost, tech-driven options, such as telemedicine consultations.

The primary driver will be information technology. ACOs commit provider networks to meeting electronically-monitored standards, sharing data, and performing analyses that will, the reasoning goes, reduce treatment costs while improving patient outcomes.

It is all about metrics, demonstrable levels of performance for caregivers. A GE white paper, “Healthcare by Any other Name,” tells us the developing infrastructure required to render a fragmented system whole, “requires a committed upfront investment,” helped along by Meaningful Use and ACO shared account monies, but is a long-term goal, to be accomplished in phases.


The transition, the report said, begins with a strong foundation in Healthcare Information Technology. Job one is data capture, followed by sharing that data between locations and vendors.

A health management infrastructure, according to GE’s white paper, requires three foundational layers: data collection, system intelligence, and data interoperability. One tool will not manage a population, rather a plethora of them will be required.

Sharp HealthCare in San Diego, which participates in both government and commercial ACOs, is undergoing a half-dozen system changes in order to service ACOs properly.

Such transitions are not without their challenges. “Information Week” reports on recent KLAS Research suggesting that “healthcare leaders know they will need new sorts of analytics to keep pace with structural changes, but don’t know which ones, or where to get them.”

ACOs are often comprised of distinct providers operating independent delivery networks. Integration of these disparate IT systems is a key challenge.

Transition leaders are advised to avoid leaning on their electronic health record platform vendors, because they deal in transactional systems, not the analytical platforms caregivers will need to group patients according to chronic condition populations.

The end-game is standardizing the best practices uncovered through data analysis, devising specific procedural steps, and embedding them into electronic checklists that monitor providers for protocol accountability.

Going Slow

The GE white paper counsels, “With a phased approach and sensible technology plans, concerns about the cost and complexity of implementing these new care models should not prevent providers from moving forward.”

The National Association of ACOs (NAACOS) released a survey in January, revealing that those

participating in the Centers for Medicare & Medicaid Services’ (CMS) Medicare Shared Savings Program (MSSP) spent an average of $2 million on start-up costs, a figure that could increase to $4 million before shared savings, to be split with the government, are realized.

According to CMS, about 273 Medicare ACOs have been established under the MSSP, which was created by the ACA.

In February, CMS issued a first report on its own ACO program and claimed that entities shared $273 million in savings in 2012, while the Medicare trust fund benefited to the tune of $128 million.

Early successes may only be symptomatic of “low-lying” fruit, such as keeping people out of emergency rooms. The real and pending challenge is clinical improvement: detecting the best patterns of care at a cost and getting physicians to apply them.

The indifference of patients to such goals has turned out to be an obstacle.

Straying Patients

Medicare fee-for-service does not limit provider choices, but that’s the patient pool ACOs draw on. Steering patients is problematic when they can choose to go outside the network.

Albuquerque-based Presbyterian Health Care Services – one of Medicare’s first ACOs – said it quit the program over this very issue.

A Harvard University study, “Outpatient Care Patterns and Organizational Accountability in Medicare,” recently published in the Journal of American Medical Association, cited a “failing link” between Medicare and patients with ACOs. The data, culled from the first two years of the ACO experience under Obamacare, confirmed that patients have no incentive to stay in network.

Patient reticence is not the only obstacle. Payers urging fewer readmissions, reductions in emergency room visits and imaging, are dealing with care providers for whom shrinking hospitals and limiting treatment is counter-intuitive.

Another issue is physician alienation from clinical integration planning and administrative execution. For many physicians, income and practice stability may trump quality of care and cause them to drop out.  Proposed solutions include more formalized arrangements that actually enroll patients in ACOs or, in the case of physicians, agreements binding them to the organization or its goals.

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