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The AAOS Primer on Accountable Care Organizations can be downloaded for free at www.aaos.org/pracman


Published 9/1/2011
Alexandra Page, MD

Don’t give up on the ACO

Key features likely to survive

Although some pundits are declaring healthcare reform dead, the concepts behind the Accountable Care Organization (ACO) are still alive. Despite increasing costs, provider reimbursement is not going up; this forces all stakeholders to provide high-quality care at a lower cost.

Because most future healthcare delivery models will likely incorporate some of the basic tenets of the ACO model, physicians will need to understand the components of the ACO and related models, regardless of whether the physician decides to participate in one. The American Association of Orthopaedic Surgeons (AAOS) hopes to help prepare members to incorporate quality metrics and cost containment strategies, as well as to transition to payment models with shared risk. This article summarizes the key components of ACOs that are likely to be retained in future healthcare delivery systems.

Proposed ACO rules
One year ago, healthcare reform was pushing toward the ACO model, awaiting the final description by the Centers for Medicare & Medicaid Services (CMS). The AAOS Health Care Systems Committee (HCSC) dedicated a symposium to the topic at the 2011 Annual Meeting, wrote a series of articles for AAOS Now, and developed a primer on ACOs. When CMS finally released its description of an ACO on March 31, 2011, however, several concerns emerged, including the following:

  • Beneficiaries (patients with Medicare benefits) would be retrospectively assigned to ACOs.
  • Beneficiaries would not enroll in a specific ACO, but could choose to receive services or seek care from another provider who is not part of the ACO. No provisions for obtaining quality or other data on care obtained outside the ACO were included, nor were any cost controls placed on care obtained outside the ACO.
  • Data sharing among providers would be encouraged to coordinate care for beneficiaries. Each provider in the ACO must notify the beneficiary of this data sharing. Beneficiaries, however, can opt out of data sharing, potentially eliminating the ability of providers to coordinate care.

Further, the legal and regulatory hurdles to form an ACO would require a significant amount of capital investment. This, combined with the limited upside (maximum of 3 percent of shared savings) and eventual risk for responsibility for overspending, made ACOs as proposed a less attractive option for many physicians, practices, and hospitals.

It is very likely that CMS will revise the ACO rules based on public comments, including comments submitted by the AAOS. In the meantime, however, ACO and shared savings concepts continue to be developed by both the government and other major payers.

The need for the ACO model
Overall, the most powerful driver toward a new model of delivering health care is the unsustainable course of current healthcare costs, which reached 17.7 percent of the nation’s gross domestic product in April 2011. All stakeholders need to take ownership of cost-effective health care to limit or halt further increases.

In the months since the ACO rules were published, one author has noted, “The vision underlying the ACO movement—of provider accountability that goes beyond delivering an individual service and of care that is integrated and patient-focused—is one worth pursuing with bold steps.” Further, payers other than CMS are increasingly pushing for change, with insurance companies and large employers demanding documented value and quality for the dollars they spend.

Value, not volume
Volume drives income in fee-for-service (FFS) delivery systems like the current dominant healthcare model in the United States. Despite the ever-increasing costs, the U.S. system has not produced optimal health outcomes. Healthcare policy authors raised concerns about how the FFS system encourages utilization without regard for true patient benefit as healthcare reform was evolving. They pointed out that under a straight FFS system, even complications are revenue-positive for the hospitals and surgeons.

Although FFS is not imminently threatened, CMS and other payers—including insurance companies—are demanding a move toward risk-sharing. At the AAOS HCSC symposium last summer, Robert Berenson, MD, vice-chair of the Medicare Payment Advisory Commission, predicted that the trend will be to eliminate FFS as a payment model. Thus, regardless of the specifics of healthcare reform, providers need to prepare for potentially profound changes in the reimbursement system.

What not to ignore
The ACO model and many other CMS pilot programs expect to realize savings by eliminating waste, much of which is due to the provision of duplicative and/or unnecessary services. Other healthcare payers can be expected to look to the CMS models as they define their own expectations of the value of care given for the dollars spent.

Achieving these goals depends on participation by all stakeholders, so aspects such as care integration, hospital and physician collaboration, and tracking and reporting of quality measures will likely be required of physicians in all care models in the future. Further, shared risk and reimbursement will likely be a mechanism for encouraging a cost-conscious and more focused practice of medicine.

Care coordination/integration
The concept of “care integration” forms the basis of the ACO model as well as other healthcare delivery models. In a medical home model, the primary care physician would be expected to coordinate the services of specialists, working with other caregivers to minimize duplication of services. The hospital, physicians, anesthesiologists, and ancillary services coordinate to provide high-quality, cost-effective care in a service line co-management model. Recognizing that anti-trust legislation has stifled integration in recent years, both CMS and the Federal Trade Commission have drafted regulations that facilitate a more balanced approach and allow some innovation.

Hospital/physician collaboration
The ACO model is based on collaboration among all stakeholders to optimize care. But other delivery models—including bundled payments or service line co-management—also require physicians and hospitals to work together.

In the past, relationships between surgeons and hospital administrators have been strained by issues such as compensation (or the lack thereof) for emergency department coverage and competition over physician ownership of ancillary surgical centers. Moving from a competitive or even adversarial relationship to a trusting, collegial relationship with hospital administration could prove challenging. However, it is increasingly necessary for successful outcomes.

Beyond working with their hospital(s), physicians should assume leadership roles that enable them to advocate for patient care from the perspective of a care provider. Multiple authors identify physician leadership as an essential part of successful integrated care systems. Orthopaedic surgeons need to position themselves to assume these leadership roles.

Performance and reporting
The ACO model includes requirements to track and report on quality outcomes. In orthopaedics, definitions of “quality outcomes” are still emerging. However, as patient-centered care evolves, the definition of quality will be expanded to include and reflect the patient’s overall experience.

The CMS proposal for the ACO model included 65 specific quality measures that would be tracked, spanning the five domains of patient experience of care, care coordination, patient safety, preventive health, and at-risk population/frail elderly health. Specific measures germane to orthopaedic surgeons include rating for a “helpful, courteous, respectful office staff” and a composite list of “healthcare-acquired conditions” that includes surgical site infection, postoperative deep vein thrombosis or pulmonary embolism, and postoperative wound dehiscence. Consistent with a move toward patient-centered care, the patient’s experience—and the provider’s compensation—may be affected as much by the front office staff as by a postoperative complication.

Patient registry use is another specific quality measure in the CMS proposal. Surgical registries have been used to track outcomes in joint replacement for many years; registries are now being established for other procedures to follow outcomes and enable the early identification of problem trends. Further, progress in the development of health information exchanges will link specific imaging or other clinical data to administrative data. These combined data will facilitate more sophisticated evaluations of population-based healthcare outcomes.

Shared risk
In the ACO model, the organization and the participating physicians share risk with CMS at varying levels. However, other models of clinical integration can also incorporate shared risk. For example, in service line co-management models, the hospital and an orthopaedic group can work to provide a comprehensive package for a total joint replacement at a bundled price.

As with the other discussed components of the ACO model, shared risk engenders provider accountability. The legacy of the ACO model will be accountability for cost and quality for all modes of healthcare delivery. Even if the specific ACO programs proposed by CMS don’t gain traction, their components will continue to be incorporated into healthcare delivery and payment systems as the United States shifts from a straight FFS model toward many different payment delivery models blending together to form a system more focused on value than volume.

Alexandra Page, MD, is a member of the AAOS Health Care Systems Committee. She can be reached at alexe.page@gmail.com