ACOs In Practice

The accountable care organization ( ACO ) is a new model that has been proposed for health care reform.

The primary objectives of the ACO are to reduce costs, increase efficiency and improve the quality of patient care. The payer is basically aiming to reduce costs and at the same time improve quality of care. Since payers would give the ACO's a lump sum to cover all care, the ACO's would retain any savings that result from more efficient patient care. This is supposed to be the motive for physicians and hospitals to ensure that the patient is healthy and out of the hospitals and not do more procedures.

The ACO members will  share in the savings that results from their cooperation and coordination. Thus, ACOs can–theoretically–act as a reform tool by incentivizing more efficient and effective care. This would help to combat the current perverse incentives of overutilization and overbuilding of health care facilities and technology.

ACOs In Practice :

The ACO would have to be a legal organization that can receive shared savings, and would have to incorporate primary care physicians who solely practice under the ACO. Furthermore, there would have to be at least 5,000 beneficiaries in the ACO for it to be viable. The ACO would provide CMS with a list of their providers willing to participate in the ACO. The beneficiaries would be determined by, among other things, the patterns of patient referrals in the region. However, beneficiaries would not be “locked in” to a given provider. The ACO would receive savings if their risk-adjusted, per beneficiary spending levels were below their benchmark.

 

An Example :

An hypothetical independent practice association (IPA) teams up with a community hospital to create an ACO. Medicare determines a benchmark, that is, what it will cost to treat the average beneficiary in that geographic area per year–let’s say $10,000. The physicians submit their traditional claims to Medicare under the RBRVS system while the hospital submits its typical DRG-base claim. Thus, the traditional fee-for-service system remains in place. At the end of the year, Medicare determines if the ACO has provided care for less than $10,000. If they have, the ACO is entitled to share in the cost savings, and the savings are divided among the providers and hospital. Though simple in theory, ACOs become more difficult when attempting to construct payment models that will distribute the savings of the ACO to the individual providers.

ACO

The primary objectives of Accountable Care Organizations (ACO) are to reduce costs, increase efficiency, increase accountability and improve the quality of patient care.

The payer is basically aiming to reduce costs and at the same time improve quality of care. Since payers would give the ACO's a lump sum to cover all care, the ACO's would retain any savings that result from more efficient patient care. This is supposed to be the motive for physicians and hospitals to ensure that the patient is healthy and out of the hospitals and not do more procedures.

The patient is supposed to get better care and this model aims to provide a patient centric care plan. The physicians may need to do a lot of  screening procedures and wellness checkups ensuring that the patient is taking the right labs and medicines and staying healthy. So the clinical perspective would be that of being proactive and ensuring that the patient requires the right care ensuring that he is in good health, and that he makes as few visits to the Hospital as possible. This is to mean that the physician will proactively care for the patient, instead of the regular model of treating patients after a health event.

Challenges :

• ACO's would find it a challenge to construct a payment model that would distribute the savings of the ACO to its individual providers.
• The patient may feel  that he is being forced to see a small group of physicians in the ACO that he is participating.
• The patient may not perceive the quality of care that the ACO model proposes.
• Would patients continue to stay within their ACO ?
• Would patients see value in the ACO and support the ACO ?

ACO's have a lot of challenges ahead but it looks very viable and feasible considering the advantages is has over existing HMOs, but then again there are some physicians who feel that the ACO's are a little ahead of time, and now may not be the good time.

The ACO debate is endless but its success or failure will depend on how the patients perceive it. If the patients see value for themselves in the ACO than the patients would support the ACO and it will succeed, if the patients do not see any value from the ACO than it would be very difficult for the ACO to succeed.