Accountable Care Organizations: Here's a Manuscript That Helps Us Move From the PPACA Legislation to Actually Making It Happen

After cracking open the latest May 5 copy of JAMA, the Disease Management Care Blog was going to read this article that showed a correlation between hospital readmissions and the number of days from discharge to outpatient physician follow-up. It was stymied, however, by a methodology that relied on 'hospital-level rates of early follow-up as medians with interquartile ranges.' 'Bleh!' said the DMCB, especially because the admission rates only differed by about 2%. This appears to be a good research idea gummed up by needlessly complicated statistics.

So instead, the DMCB moved on and turned its attention to this commentary in the same issue of JAMA by Stephen Shortell (Berkley) and Lawrence Casalino (Cornell) titled "Implementing Qualifications Criteria and Technical Assistance for Accountable Care Organizations." Don't worry if you can't get to the full manuscript, because the DMCB is here to summarize and commentize for you.

Recall that ACOs are the golden boy of D.C. policy makers, who view these entities as the next best thing to integrated delivery systems. The Patient Protection and Affordable Care Act (PPACA) says (on page 277) that the Secretary of HHS has until January 1, 2012 to establish a Medicare "shared savings" "program" (which sounds more permanent than a "pilot" or a "demonstration") involving ACOs that have a "legal" and "administrative" structure, can be accountable for cost and care over three years, have enough primary care providers, care for at least 5000 beneficiaries, have "patient centered care" and other quality "processes" in place and can provide timely and properly formatted "information" to the HHS Secretary. Examples of ACOs named in the legislation include provider group practices, individual practice networks, hospital-provider joint ventures and hospitals that employ providers.

"Shared savings," generally means that ACOs can expect to receive a fraction of Medicare's reduced claims expense that would occur thanks to their improved efficiency and quality of care.

If you're thinking 'uh oh,' you're not alone. Physicians and hospitals thinking of throwing an ACO hat in the "program" ring will need to ponder the a) up front costs necessary to create a truly high performing and cost reducing organization, b) reduced cash flows thanks to (for example) fewer hospitalizations and less testing, c) downside of a risk arrangement where costs could go up instead of down and d) track record of a fickle and cumbersome Federal bureaucracy.

Despite the risks, there will probably be no shortage of physician groups and hospitals that want to form ACOs and join the "program." Shortell and Casalino have some advice for the Feds on how to deal with them.

First, divide them into three categories:

Level I: these organizations meet the minimal criteria described above and get to share in upside savings, but little else

Level II: these organizations, as determined by a tighter and more comprehensive data reporting ability can not only share in upside savings, but also agree to take some downside risk.

Level III: these organizations have it all, can report everything and as a result get paid through partial or full capitation, laced with performance bonuses.

Secondly, provide technical assistance.

Such assistance would include help creating "organizations, legal, financial and budgeting relationships" as well as redesigning practices, implementing process improvement, fostering teamwork, getting an electronic health record up and running, scheduling patients for timely access, using e-mail and group visits and developing "patient self management support programs." To fund all this, the authors suggest that some of the money being targeted at implementation of EHRs could also be used to support ACO development.

And so it goes. The DMCB expects policymakers will think about this framework while they're writing up the regulations that define exactly how the HHS Secretary will run the "program." They don't have long to do so, since the deadline is about 1½ years away.

In the meantime, the DMCB also thinks

1) this manuscript is a good and necessary next step in the journey from legislation to actually making this happen. If your organization is thinking about pursuing an ACO, this should be in your knowledge library.

2) While the DMCB agrees that ACO assistance will be necessary (the disease management industry is particularly savvy about risk and has the scars to prove it), we shouldn't kid ourselves: no one has experience in setting up one of these newfangled ACOs. What's more, the money saving track record of many of the redesign elements described above is shaky at best.

3) that it will be interesting to see how willing newly formed ACOs will be to enter into relationships with the Feds that involve downside risk. As the regulations get written, policymakers will need to think about the wisdom of letting organizations put their endowments or brick and mortar up as collateral.

(There's lots more on Accountable Care Organizations here)