One of the major features of the Affordable Care Act (ACA) is the idea of Accountable Care Organizations (ACOs). The final regulations from Medicare were issued in October, 2011, so the creation of ACOs seems to be moving forward. ACOs will be groups of primary care doctors, specialists, hospitals, and possible other providers who act together to provide comprehensive care, and receive either more money from Medicare (and probably, eventually, other payers) or, at least, smaller reductions in payments. The only thing that is definitely required to form an ACO is a group of primary care doctors, but since groups of primary care doctors rarely have sufficient capital to fund the necessary infrastructure, so it is likely that almost all will include at least one hospital.
The stated purpose behind encouraging ACOs is to increase quality. It is easy enough to see how quality could be improved in our non-system of health. Because the bar is so low, there are tremendous opportunities that come from lack of organization and coordination of care. Hospitals get paid for caring for people who are admitted. Thus, up to a point (the point at which payments do not exceed costs), they want admissions. Patients prefer to stay healthy, or at least healthy enough to not have to be admitted to the hospital, and hopefully their primary care doctors support this goal. Hospitals have already started being financially penalized by not receiving reimbursement from Medicare for readmissions for the same problem they were discharged for, or complications of that problem. Managing this issue will require the ACO to have not only financial relationships with primary care doctors, but often with long-term care facilities as this is where patients are discharged to – and return to the hospital from.
Fisher, McClellan, and Safran, in their New England Journal of Medicine article “Building the Path to Accountable Care” (December 29, 2011; may require subscription)[1], identify five “challenges” to implementing ACOs with suggestions for how to overcome them. The challenges are providing timely and useful data, overcoming transition costs, gaining consumer support, learning what works and using that knowledge to inform policy and practice, and clarifying the path forward. Their suggested approaches to solving them are largely based upon what is being done in existing integrated health systems (such as Kaiser and Geisinger). This makes sense, as these systems were the model for ACOs and are often relatively cost effective, but it will require major restructuring for other such systems to develop in ways that can work as well. The authors do not address a major challenge for ACOs, which is that every patient will be identified with a particular ACO (based on the physician from whom they receive the majority of their primary care) and that ACO will be held financially responsible for that patient’s costs, but that the patient will be free to receive service from outside that ACO. This is a political decision, intended to avoid the criticism that the ACO program is just “managed care” in new clothes by ensuring that the program will not “restrict” people. Of course, it is a huge flaw. If a patient is not happy with the care they receive from members of their “identified” ACO, whether that is for “good” reasons (denying unnecessary, excess, risky procedures, hospitalizations, etc.) or “bad” reasons (less than the best quality), the patient can go elsewhere and receive that service from someone else. And if Medicare deems it unnecessary or excessive, it is the “identified” ACO that will receive the financial penalty, not those providing the service.
The authors’ final challenge, the vaguely worded “clarifying the path forward”, is about future changes, including (from their table) “Create meaningful alternatives to fee for service for all providers.” This is a good idea, and not a new one. It means that rather than have the provider (hospital or doctor) paid for each particular service, the payment is tied to something else. Most simply, it could be a global fee for providing care to a patient, as the capitated payments in traditional HMOs. This allows practices to budget their resources, and also allows patients to get care in the way they need it. If a doctor is being paid a set amount in advance, there is no financial incentive for them to require a person to have to take off from work, travel, park, and wait to be seen when that person has a question that can be answered by phone or email. You would only have to be seen in person if either you or the doctor thought that there was a reason to do so. The disincentive under the current fee-for-service system is that the doctor doesn’t get paid unless you are seen in person. In addition, the ACA law envisions paying more for higher quality (or less for lower quality). So why were these “meaningful alternatives” not included in ACA? Again, political, and the question is “what will change the politics in the future?”
In another NEJM “Perspective”, “Achieving accountable care – “it’s not about the bike” (published online on December 28, 2011), Walker and McKethan argue that it is the skills and competencies of providers, rather than the structure of the systems, that will determine the success of ACOs. Their metaphor is from Lance Armstrong’s memoir, in which Armstrong acknowledges the importance of having a great bike but says that “Although advanced equipment is very important, winning depends more on athletes' riding skills, physical conditioning, and race-day effort.” Cute, but obvious; any athlete with enough money (and all top cyclists have backers with enough money) can buy the best bike, but it is his or her skill and dedication that leads to victory – or not. Is it, however, a good metaphor for medical care? “If an ACO were a bicycle,” Walker and McKethan write, “its wheels, spokes, and gears would be the criteria used by payers such as Medicare to determine providers' eligibility, the methods used to assign patients to a given ACO, and the manner in which financial bonuses are calculated.” They then go on to discuss at some length what ACOs will need to do to “…compel and equip the athletes riding them…” (meaning providers) to do what is necessary, for “…accountable care will depend on a care team's identification of and action on the specific needs and preferences of the individual patient, deploying the most relevant, tailored interventions and supportive services to address patients' specific needs, circumstances, and preferences.”
Sound good? It is an appropriate metaphor in that structure alone will not guarantee success, but it loses strength after that. ACOs are not bicycles, and providers are not athletes. Most important, “success” in the arena of healthcare should not be about “winning”, about “beating” the other “competitors”, but about development structures, methods, practices, and reimbursement procedures in which everyone receives the best, most appropriate care. In which we all win.
And that is going to be one of the big challenges, because neither of these commentaries addresses the fact that not everyone in our country is going to be part of an ACO, and not everyone in our country has health coverage. Those people who do have coverage have found their premiums, co-pays, and deductibles increasing and their benefits diminishing. ACOs are (at least initially) a program for Medicare recipients, but all we hear from Congress and pundits is that “Medicare costs too much” and that these costs need to be scaled back, so unquestionably the emphasis of programs like ACOs will be on reducing cost.
I have often noted that much of the excess cost in this country is from providing unnecessary, or even harmful, care, and so there is not necessarily a conflict between saving money and increasing quality. But people are different, with different diseases and needs and wants, so there will need to be flexibility. And those who are most disenfranchised will remain outside the pale.
[1]Fisher ES, McClellan MB, Safran DG, “Building a path to accountable care”, N Engl J Med 29Dec2011;365:2445-2447
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