Jennifer Dennard, E-Media Marketing Specialist

Like many acronyms in healthcare today, the phrase ACO has gained somewhat of a cult following. It generates newsworthy water-cooler buzz, is considered a panacea for the healthcare industry by many, and truly understood by few.

In a very small nutshell, Accountable Care Organizations (ACOs) are coalitions of caregivers – primary care doctors, specialists, hospitals, labs and other healthcare services – that will provide patients with integrated care under one umbrella. If set up in such a way that meets government requirements – some of which are murky, some undefined and others yet to be written, care givers that meet certain care and cost benchmarks may qualify for monetary rewards from Medicare.

The Doctor’s Point of View
American Medical Group Association (AMGA) President and CEO Donald W. Fisher, who is also Chairman and CEO of Anceta LLC, has, through the AMGA’s ACO Development Collaborative, provided guidance to congressional leaders on the appropriate language regarding ACOs and lobbied aggressively for its inclusion in the healthcare reform legislation. He believes that internally produced data and feedback amongst participating organizations – which in truth will also include medical vendors and insurers – should be used to standardize care processes and continually improve performance and quality of care.

“ACOs are one of the key efforts of the recent healthcare reform legislation that address the two greatest challenges facing US healthcare: unsustainable escalation of costs that threaten the affordability of care; and care that is fragmented, poorly coordinated with little accountability for the outcomes,” Fisher says. “It is widely believed that the current volume-based payment system is part of the problem and needs to be restructured to support paying for value rather than paying for delivering services and procedures. The ACO concept couples payment and delivery systems reforms that may have the opportunity to bend the cost curve while improving access and quality.”

He adds that ACOs have the opportunity to improve quality and efficiency of services, and to be rewarded for their successes through the use of incentive payments in the form of shared savings. “Inherent in this approach is a fostering of care coordination, patient-centered care, use of team care, care management, and employment of electronic infrastructure.”

The Vendor’s Point of View
Electronic infrastructure is just what Alan Gilbert, Vice President of Business Development at AxSys Health Corp., provides via the company’s Excelicare software platform – an integrated collaborative and coordinated care/disease management/health information exchange (HIE) solution. AxSys recently entered into a strategic alliance with Health Access Solutions, a healthcare application services provider based in California known for its care and utilization management technologies. The alliance will enable the companies to create an integrated care coordination platform that will assist the multidisciplinary care team, comprised of provider and insurer organizations, in delivering accessible, high-quality care while carefully managing risk and cost – vital to the viability of an ACO.

Gilbert has become quite a proponent of ACOs, and believes that consumers should ideally see an increase in the individualized attention paid to the management and coordination of their overall health, and in the resultant quality of care they receive.

“We have all had experiences with care for ourselves, for our parents or for our children where we have to explain the medical history, the medications taken and allergies over and over again to each healthcare practitioner,” Gilbert explains. “With a collaborative and coordinated process in place, each caregiver that we encounter will have the requisite data and history on each of us so that, for example, lab tests that were just taken will not need to be repeated.

“In addition, patients will be asked to become a more active participant in their own care, as they will be regarded as the center or focal point of all health-related activities,” he says. “Because care will be coordinated more effectively, greater attention will be paid to preventive services with the goal of keeping patients healthy and minimizing avoidable conditions.

Gilbert also points out that greater focus will be placed on the management of chronic diseases and conditions. “The technology that supports ACOs will help providers track adherence to disease and chronic care plans to prevent escalation of the disease state or the development of co-morbidities,” he explains. “And, because members of the patient-focused care team – including patient, provider and payer – can communicate with one another more effectively, care pathways that will be developed are more likely to be followed.”

And of course, cost savings are on everyone’s minds. “Over the long haul, patients will see a slowdown in the escalating cost of care,” Gilbert says. “Care coordination will help reduce waste like unnecessary duplication of laboratory and diagnostic tests, and minimize errors such as adverse medication reactions. In addition, as chronic conditions are managed more effectively, fewer patients will need to be hospitalized or see by their providers in the most expensive setting, also reducing the cost of care.”

The Insurer’s Point of View
Lowering costs for patients and providers would seem to lead to less profitability for health insurance companies. So what’s in it for them?

“We strongly support initiatives that move toward paying for high-quality patient outcomes rather than volume of services delivered, ” says Eric Earling, spokesperson for Premera Blue Cross, a member of the AMGA’s ACO Development Collaborative that serves consumers in Alaska and Washington state. “That shift is essential to reducing trends in rising medical costs. Our hope is that ACOs will help spread the use of such shifts in payment methodology, which we believe are key to creating a more sustainable healthcare system.”Premera’s stance echoes findings in a report funded by the Urban Institute and Robert Wood Johnson Foundation. In the report, authors Kelly Devers and Robert Berenson hypothesize that “if ACOs provide desirable delivery system enhancements for Medicare, we would hope and possibly expect that they would also be desirable for other payers as well. In fact, some recommend that … commercial insurers should follow Medicare’s lead or collaborate with them on an ACO program initiative. Arguably, such payer collaboration would align and strengthen providers’ financial incentives and avoid conflicting program features and additional administrative burdens.”

Perhaps the biggest question for insurers at this stage of the ACO game was posed in a recent article in ACO Insights: “Can payers – public and private – stop reimbursing providers on the basis of volume, and begin paying them on outcomes – that is, on how well they take care of people? If an answer is found, experts believe it could stop the unrelenting rise of healthcare costs. Some believe accountable care organizations could provide at least part of that answer.”

Are there Drawbacks?
It seems that most providers and vendors have nothing but praise for the ACO concept. Of course, they also have a list of challenges they expect to encounter along the path of developing this new form of collaborative care. Parts two and three of this series will provide a snapshot of these challenges, and delve into some of the controversies that have arisen as a result.

Source: Porter Research Blog