The program will expand on the long-standing concept of capitated reimbursement, a per-member, per-month advance payment model. The capitated arrangement will be overlaid with targets for overall costs and incentive provisions for meeting cost goals and various quality metrics. "The ACO is a natural next step for organizations like ours that already contract for defined populations on a risk basis," Burke says. "Accountable care is the next step in managed care with more focus on population health, chronic disease states and clinical data exchange."
Burke likens the ACO to well-traveled managed care models-with one key difference. In the past, "many health plans would sign a plan for capitation, transfer the insurance risk, and say 'good luck.' In this case, everybody is asking how we can control spending. Now, the payer and provider will work together. We'll identify the patients who are diabetics on day one, not six months later when they happen to come in to see a primary care physician." Blue Shield California is equally bullish on the model, having launched three other ACOs in the state, says Kristen Miranda, the health plan's vice president for network management. "The cost trajectory we are on is unsustainable," she explains.
There is growing consensus over the economic imperative cited by Miranda that is driving the formation of ACOs. And there is equal consensus over the sophisticated I.T. that needed to make them work, regardless of the particulars of local structures. Information technology will be needed to plug the many gaps in the industry that stand to impede accountable care, particularly if care is being coordinated across inpatient, outpatient and home care settings.
A missing link
An electronic health record, a health information exchange, care coordination tools, and data analytics capabilities are the prerequisites. But a well-connected delivery ecosystem is not enough. The missing link may prove to be consumer involvement, a gap some providers hope to fill with the personal health record and related connectivity to home monitoring devices.
The financial stakes for ACO success are high. It doesn't require bravery on the part of financial experts to predict that the national rise in health care costs, unless checked, could cripple the economy. The Centers for Medicare and Medicaid Services estimates total health care spending will nearly double to $4.6 trillion in 2020, from $2.6 trillion in 2010, and health care spending per capita is forecast to increase to $13,708 in 2020 from $8,327 in 2010.
For many, the ACO model offers a way to stem the red ink. "The ACO is the last best hope the industry has before we get to the sledge hammer approach that says we can't afford this and our only choice is to start cutting everything," says Jay Crosson, M.D., senior fellow at the Kaiser Permanente Institute for Health Policy. That sentiment helps explain why ACO efforts from commercial payers like Blue Shield California now dot the map.
However, the most influential dot still belongs to the federal government. CMS in March released a proposed Medicare Shared Savings rule, authorized under the health reform act, which will designate entities as ACOs and offer risk-sharing reimbursement models for participants. The ACOs under Shared Savings will have a minimum of 5,000 Medicare beneficiaries.
The CMS Center for Medicare and Medicaid Innovation is creating additional ACO programs. The federal ACO programs are loaded-or perhaps overloaded, as many have commented-with specifics, but more broadly they signal the effort by Medicare to shift its payment methodologies away from volume and productivity toward performance and outcomes, the cornerstones of accountable care. And where the government goes, private industry follows.
The multitude of emerging federal and commercial ACO models has resulted in confusion over what the term actually means. Its many related arrangements, all operating under the large umbrella of "accountable care," include medical homes, bundled payments, gain sharing, shared risk, and co-managed service lines.
An industry in transition
For now, any number of ACO-like efforts are underway, primarily among EHR veterans. A few industry observers equate the trend to old wine in new wineskins. "The ACO is an extension of pre-paid medical care and health care on a budget," says Gene Lindsey, M.D., president and CEO of Atrius Health, a highly-automated consortium of six group practices spanning over 1,000 Boston area physicians. The organization serves 1 million patients. Nearly half of those patients receive care under global payment arrangements, meaning Atrius receives a budgeted amount for cradle-to-grave services for each patient. The other half are under conventional fee-for-service arrangements.
"During the last five years, we have been trying to conceptualize ways of moving more patients from fee-for-service to global payments," says Lindsey. "It is like taking on responsibilities of a general contractor on a construction project. But the complexity of health care means that very few organizations can deliver the entire product. When patients are seeing providers willy-nilly, no one is paying attention to total medical expense. We want to make sure there is no over-utilization. The key is making sure that things that should be done are done. Without the right preventive care, you are making sure you will have expensive care later. We tie those concepts together."
Atrius will apply to become a Pioneer ACO under Medicare, Lindsey says. The program, he explains, treats Medicare fee-for-service patients as if they were under global payment arrangements. "If total cost is less than would be expected, and quality exceeds certain predetermined levels, we would split any savings with Medicare," he says.
