Demystifying the Accountable Care Organization

Many early adopters learn fast as two-year anniversaries approach

More than two years after the enactment of the Affordable Care Act, a voluntary program to reduce Medicare costs remains largely misunderstood by patients. And even some providers are hazy on the details.

Though early adopters of the federal Accountable Care Organization programs are meeting their two-year anniversaries this year, many hospital leaders continue to be skeptical that the potential for long-term savings is worth a significant short-term investment.

"Accountability, by and large, is driven by quality and cost in this context,” said Jason Dinger, CEO of MissionPoint Health Partners, Saint Thomas Health's ACO. “The government, in its Medicare Shared Savings program, has gone to the provider community and said we're going to increasingly pay you on your ability to improve outcomes and lower health care costs in your community."

An accountable care organization is simply a group of providers who come together to better coordinate health care. By connecting providers and payers, ACOs align incentives and manage costs by avoiding unnecessary services and reducing errors while improving quality.

Organizations developed through the ACA and registered via the Center for Medicare and Medicaid (CMS) manage solely Medicare patients, but commercial payers are also jumping in, creating a number of different care models. Some insurers strike deals with Medicare-based groups to add their commercial population to the ACO's existing patient pool, while others start their own coordinated models from the ground up.

The Medicare Shared Savings Program (MSSP), the government's base model, rewards ACOs with shared savings that the organizations contribute toward through cost reduction. CMS reported in January that there are some 360 federally registered ACOs serving more than 5.3 million Americans, generating in excess of $380 million in savings.

CMS offers two other ACO models: the Advance Payment Model, which provides upfront payments for rural or physician-based providers, and the Pioneer ACO Model, designed for more experienced providers. To participate in the federal program, providers are required to have at least 5,000 Medicare beneficiaries and sign on for a three-year commitment. In order to earn the shared savings, they must report to CMS on 33 quality metrics in four domains — patient and caregiver experience, care coordination and patient safety, preventive health and at-risk population management.

In their first year, ACOs receive payment for accurately reporting the quality measures. But in the second year, reimbursements are tied to performance for 25 of the metrics. In the third year, all but one of the metrics are pay-for-performance. Metrics range from screenings for colorectal cancer and depression to influenza immunization and other vaccinations. On the experience level, patient surveys meter timely care, access to specialists, health education and other criteria.

"I look at the metrics as making sure we always strive for improved clinical care," says Dr. Jordan Asher, chief medical and integration officer at MissionPoint Health Partners. "Doing this while decreasing cost is definitely the challenge, as improving clinical metrics short term does not necessarily lead to savings. We have to focus on both simultaneously."

The commercial component

While federally affiliated organizations are coordinating Medicare patients through CMS, many commercial players are replicating the model with their employer- or self-insured patients. Aetna, BlueCross BlueShield, Cigna and UnitedHealthcare all have commercial collaborative care organizations with physician groups or hospital systems. For example, Texas-based Tenet Healthcare announced in 2013 a partnership with BlueCross BlueShield of Texas to offer an integrated care network for its commercial patients among Tenet hospitals and providers beginning in 2015.

Though commercial ACOs and insurance-provider partnerships continue to grow, it is difficult to quantify their numbers and how much money, if any, they have saved, partially because there is no standard among commercial programs, even in naming. Some stakeholders maintain that the only ACOs are federal ones, and everything else is a "collaborative care network," an "integrated service organization" or, even more vaguely, simply a partnership between providers. Other organizations, however, call themselves ACOs despite managing no Medicare patients at all. Furthermore, commercial ACOs are not required to publicly report their contractual obligations, quality metrics or savings, making it difficult to compare them to Medicare programs.

Additionally, some organizations work in both spaces, offering a blended infrastructure that manages both commercial and government-based cost reduction programs. One such program is Nashville's MissionPoint Health Partners. A CMS-registered program, MissionPoint also includes a significant commercial insurance component. In 2013, BlueCross BlueShield of Tennessee launched a four-year agreement with MissionPoint — similar to Tenet's Texas program — that kicked off in January and produced a care network for self-funded employer groups.

Another ACO that blends federal and commercial reimbursement is AnewCare, a subsidiary of Mountain States Health Alliance, a Johnson City, Tenn.-based hospital network with facilities in four states. But AnewCare has its own insurance arm — CrestPointe Health — that sets it apart from even the most innovative ACOs.

CrestPointe Health insurance plans were, at first, offered only to MSHA employees and their dependents, but the company intends to open up the plan to other employer groups this year, boasting significant success in reducing costs for its 15,000-patient population in two years of service.

"This is how we created sustainability in the ACO," said Rob Slattery, CEO of AnewCare's parent organization Integrated Solutions Health Network. "The health plan allowed us to generate new revenue based on premiums and fund the infrastructure to coordinate care and invest in informatics and other systems."

AnewCare has no desire to grow into a giant insurance competitor, Slattery said.

“We're not trying to be BlueCross; we're trying to be the best at creating value," he said, adding if the two-pronged insurance and ACO strategy can demonstrate success, AnewCare stands ready to contract with major insurance providers to manage their populations.

"We wanted to transform care, and the only payer looking to do something different and innovative was CMS," Slattery said. "So we partnered with CMS, and we found as we went to commercial payers, they didn't have the capabilities to go where we wanted to go. So we saw there was an opportunity to do this, create an insurance company direct to market, and be faster — faster innovators, faster adopters and engage our community of employees."

What's next?

Beyond the basic ACO model, CMS's Innovation Center continues to test other payment and service delivery models through a number of additional initiatives.

For example, CMS is testingbundled payment programs, primary care investments and Medicaid-based initiatives with providers across the country, attempting to demonstrate successful savings in test-model scenarios before potentially rolling out national programs.

However, the relationship between the MSSP program and the additional initiatives are not firmly established, and many hospital executives are waiting for the innovation phase to pass before implementing an ACO program in their hospitals. According to a Purdue Healthcare Advisors survey taken in December 2013, of the 46 percent of hospital executives who said they did not have plans to implement an ACO model in the future, more than half said they felt there were too many unknowns and wanted to see stronger evidence and consistency of successful models.

"I think both insurers and hospital systems are waiting for someone else to run through it for a few years," said Alex Norton, project analyst at MissionPoint. "There's a lot of reluctance around: 'Is it going to crash and burn in a few years? Let's not jump on that ship just yet.' But we dove in headfirst, and said, 'We can make this work; we can make this system better.'"

Additionally, because ACO-like programs vary by market, modified per individual agreement between insurers and providers, the system does not translate easily to widespread implementation by a major health system. Adoption, then, is a slow process, occurring on a local hospital or hospital network basis.

"Our hospitals provide care to Medicare ACO patients throughout the country," said Ed Fishbough, spokesman for HCA. "Our affiliated hospitals are involved in many local initiatives with payers and our medical staffs that have similar goals to the Medicare triple aim — better care for our patients, better health for our communities and lower costs through improvement for our health care system."