ACOs: Six Things Specialty Practices Should Know =TOS Newsletter, July/August 2014= Authors: John P. Schmitt, Ph.D. and J. Garrett Schmitt, MBA, PCMH CCE INTRODUCTION Do you remember the analogy of four blind men describing an elephant? The blind men gave accurate descriptions of the parts they were holding but a complete image of an elephant did not result. Similarly, the literature about Accountable Care Organizations (ACOs) is largely authored by health policy researchers and representatives of hospital associations, medical societies, commercial payers and suppliers of various software and services used by ACOs. Each resource yields a professional perspective of an ACO but readers generally do not gain a clear understanding of an ACO specific to their needs or situation. No wonder medical providers, like orthopaedic practices, are confused about the new health care delivery model called ACOs. Therefore, the purpose of this article is intended to answer six basic questions about ACOs which are likely on the mind of interested TOS newsletter readers. The answers are not exhaustive but are based on extensive literature research and the authors years of consulting experience working with both ACO clients and orthopaedic practices. SIX QUESTIONS ABOUT ACOs 1. Is an ACO just another type of medical practice?
Yes and no. An ACO is a group of medical providers who come together to provide coordinated care to patients. It could take the form of an integrated health system with diverse providers under one corporate roof (single TIN) in an urban market or it could be multiple independent practices spread over a hundred mile radius. Either way, the approach to delivering care is what makes an ACO unique and different from a traditional medical practice. A good deal of collaborative planning and teamwork among ACO providers is required to execute such an approach, but the ultimate objective is to coordinate care and lower the per capita cost of healthcare. ACOs can include primary care physicians, specialists, hospitalists, hospitals, and ancillary providers all working together as a team along with care coordinators. However, the exact structure of an ACO can vary widely. In addition, ACOs are not required to include hospitals or specialists as members, only PCPs. Some ACOs will contract with specialist providers and hospitals in their service areas depending on competitive factors and demographics. ACOs provide coordinated care to a specific patient population assigned to the ACO by a payer like Medicare, a commercial insurer or a self-insured employer. The ACO providers are expected to be proactive in determining and meeting the diverse medical needs of an assigned population ranging from those who are healthy to those with chronic or terminal conditions.. The mutual goal of the ACO team members is to help patients transition their way through the continuum of healthcare providers so they receive the right care in the right place and at the right time. Traditional medical practices are historically more reactive in treating patients who come to them for care. A traditional practice strives to give high quality care but functions more
as a specialty silo in the healthcare continuum. Specialists rely on referrals from other physicians and treat their patients according to their own internal treatment protocols. Generally speaking, once the patient leaves the physician s office the patient or another physician is responsible for ongoing medical care. 2. How does an ACO pay its member providers? Very differently from fee for service payment. The end game for ACOs is to produce shared savings from effectively and efficiently treating assigned populations. ACO member providers treat patients coming to their practices, but use the team model described above to deliver care. Performance is measured using evidence based outcomes, quality measures, and utilization and the resultant savings ultimately determines provider compensation. One question often asked by independent providers is whether participating in an ACO will affect their current fee-for-service contracts with payers. The answer is no. If the ACO providers are independent practices, the practices continue to bill for their services using the traditional fee-for-service approach and receive revenue accordingly. In contrast, the revenue paid by the ACO is a portion of shared savings using a compensation model based on aligned incentives once the savings are realized. As a result, under most arrangements no compensation is paid at all if no shared savings are earned. Therefore, the compensation paid by an ACO to its member providers is over and above the revenue received from their independent practice. In other words, ACO compensation can essentially be thought of as a bonus payment for cutting costs and improving quality. 3. Should a specialty practice start an ACO?
No. An ACO s assigned patient population is based on the treatment history (E & M codes) of the primary care practitioners in the ACO. Payers look for a critical mass of primary care providers to constitute an assigned population numbering at least 5,000 insured members. Specialists are sometimes considered primary care providers when there is a long history of ongoing treatment between the specialist and an assigned insured. In short, a specialist practice is better off contracting with an existing ACO in its service area than attempting to start an ACO. 4. Are ACOs financially viable? They can be, if risk is successfully managed. The first 32 Pioneer ACOs were launched by the Centers for Medicare and Medicaid Services (CMS) in 2012. Early in 2014 CMS released their results after two years of operation. In short, only about 25% earned enough in shared savings to be considered financially successful. However, it should be noted that the Pioneer ACO program was a minimum of three years so the story is not over. After three years the Pioneer ACOs must assume some downside risk and, in return they will receive a higher portion of the shared savings. So is the risk worth it since a 25% success rate does not seem like great odds for an ACO investment? The answer is yes, but only if approached using the hard lessons learned by the Pioneer ACOs. As results are being reported in the literature, it is apparent the Pioneer ACOs which quickly focused on reducing costs through care management and population health management were the ones that succeeded. The ones that did little or nothing but collect CMS seed money did not succeed. Some of the ACOs were doomed from day one as they failed to educate their physician members as to the requirements that would be necessary for success. They erroneously assumed needed transitions in care would be seamless to their physicians and no change in
culture or protocol would be required. Management s attention should have been focused on those initiatives that would effectively drive shared savings to the exclusion of all other distractions. 5. How do specialty practices get involved in ACOs? They will likely be selected based on cost and quality histories. Basically, ACO providers are organized into two treatment teams, an internal and an external team. The internal teams are comprised of primary care physicians and their practice staffs. They stratify assigned populations based on health status, organize a reach out process to get patients engaged in their care e.g. come in for annual physicals, assess the population s health needs using population health analytics, and develop treatment protocols which include how to handle specialist referrals, hospital admissions and discharges as well as the use of ancillary providers. The ability to produce disease registries increases the probability of success, especially in managing high-risk patients. Certain hospitals and specialists are selected by the ACO s governance body to be members of an external care team. These external providers are not part of the primary care physicians staffs. The external member selection criteria is determined in different ways including specialist membership in integrated delivery systems, cost histories, quality performance, protocol compliance and payer preferred status. The number of orthopaedic specialists needed by an ACO will depend on the size of the insured population and its payer mix. For example, large numbers of Medicare members assigned to an ACO will dictate the need for more orthopaedic physicians than a comparable number of members aligned with commercial payers. After doing some research, an independent orthopaedic practice could make a proactive effort by
expressing an interest in ACO participation, thus becoming a preferred provider who receives a greater number of referrals. 6. Are there preparations an orthopaedic practice could make to enhance their likelihood of selection by an ACO? Yes. The National Committee of Quality Assurance (NCQA) has initiated a new medical home program for specialists called the Patient-Centered Specialty Practice (PCSP) Recognition Program. The NCQA website describes the PCSP program as one that recognizes specialty practices that have successfully coordinated care with their primary care colleagues and each other, and that meet the goals of providing timely access to care and continuous quality improvement. In other words, specialists undertaking the program will comply with NCQA standards for testing, referrals, care coordination and communication among providers that contribute to the CMS Triple Aim mission of lower cost, higher quality and improved health of assigned populations. SUMMARY The healthcare industry is moving aggressively away from fee for service medicine to valuebased care models like ACOs. In the last five years ACOs have increased to over 600 in the United States. It is estimated about 12 percent of the insured population is currently part of an ACO panel. Recently, three payer representatives from major insurers participating on a panel sponsored by the Medical Group Management Association (MGMA) in March 2014 stated their organizations expect to have 50 percent of their insureds in ACO like arrangements by 2017. Although ACOs are largely controlled by primary care practices, there is an important role to be played by specialists like orthopaedic practices. Primary care physicians in ACOs are aggressively looking to establish collaborative relationships with hospitals and other providers.
These relationships must necessarily be mission effective and long term to meet payer contractual obligations. Early specialist practice adopters who get the Triple Aim mission and can help move the ACO cost needle down will be rewarded by a portion of the shared savings. As a result, every orthopaedic practice should assess its care delivery model and position itself for the rapid growth of ACOs.