accountable care organization (aco) tutorial
DESCRIPTION
Detailed description of background, features, requirements, risks and strategy for ACO development.TRANSCRIPT
ACOs: Core Features and Implications for Care Delivery
Charles DeShazer, MD
Overview
What is an Accountable Care Organization (ACO)?
Why is ACO formation being supported by the government?
How are ACOs different in design and operation?
What are the critical success factors for ACOs? How should providers evolve to or participate
in ACOs?
What is an Accountable Care Organization (ACO)?
Genesis of the ACO Concept Concept began to take shape in 2001 based on work of AMGA
to define principles of Accountable Physician Groups Council of Accountable Physician Practices (CAPP) formed in
2002 by AMGA Vision: to foster the development and recognition of accountable
physician practices as a model for transforming the American health care system
Elliot Fisher “Creating Accountable Care Organizations: The Extended Medical
Staff”, Health Affairs, 2007,26:w44-w57 “Fostering Accountable Health Care; Moving Forward in Medicare,
Health Affairs, 2009, 28:w219-w231 Formally proposed and defined in MedPac report to congress in
June 2009 ACO funding supported in the Affordable Care Act beginning in
2012
What is an Accountable Care Organization (ACO)? An Accountable Care Organization (ACO) is a provider-led organization
whose mission is to manage the full continuum of care and to be accountable for the overall costs and quality of care for a defined population. An ACO is a combination of a hospital, primary care physicians and possibly specialists.
Potential ACOs include: Integrated delivery systems Physician hospital organizations (PHO) Hospital plus multispecialty groups Hospital and independent practices
Three essential characteristics:1. Ability to manage costs and quality for patients across the continuum of care and
across different institutional settings2. Capability to prospectively plan budgets and resource needs and distribute
payments3. Sufficient size to support comprehensive, valid and reliable performance
measurement (estimated to be at least 5,000 Medicare or 15,000 commercial patients)
Why is ACO formation being supported by the government?
US Healthcare System is in disarray
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Highest cost and lowest quality system in the world among developed nations
Complex, fragmented, & confusing system Misalignment of incentives Lack of transparency of pricing and costs Inadequate data to assess value (i.e. interaction
of quality, cost and satisfaction) Variations in care with no apparent benefits Costs on an unsustainable trend
Note: * Estimate. Expenditures shown in $US PPP (purchasing power parity).Source: Calculated by The Commonwealth Fund based on 2007 International Health Policy Survey; 2008 International Health Policy Survey of Sicker Adults; 2009 International Health Policy Survey of Primary Care Physicians; Commonwealth Fund Commission on a High Performance Health System National Scorecard; and Organization for Economic Cooperation and Development, OECD Health Data, 2009 (Paris: OECD, Nov. 2009).
AUS CAN GER NETH NZ UK US
OVERALL RANKING (2010) 3 6 4 1 5 2 7
Quality Care 4 7 5 2 1 3 6
Effective Care 2 7 6 3 5 1 4
Safe Care 6 5 3 1 4 2 7
Coordinated Care 4 5 7 2 1 3 6
Patient-Centered Care 2 5 3 6 1 7 4
Access 6.5 5 3 1 4 2 6.5
Cost-Related Problem 6 3.5 3.5 2 5 1 7
Timeliness of Care 6 7 2 1 3 4 5
Efficiency 2 6 5 3 4 1 7
Equity 4 5 3 1 6 2 7
Long, Healthy, Productive Lives 1 2 3 4 5 6 7
Health Expenditures/Capita, 2007 $3,357 $3,895 $3,588 $3,837* $2,454 $2,992 $7,290
Country Rankings
1.00–2.33
2.34–4.66
4.67–7.00
Exhibit ES-1. Overall Ranking
Exhibit 1. International Comparison of Spending on Health, 1980–2007
Note: $US PPP = purchasing power parity.Source: Organization for Economic Cooperation and Development, OECD Health Data, 2009 (Paris: OECD, Nov. 2009).
Average spending on healthper capita ($US PPP)
Total expenditures on healthas percent of GDP
$7,290
$2,454
16%
8%
Threefold variation in per capita spending
10 Source: Peter Orszag, N Engl J Med, 2007
The lack of a relationship between quality and Medicare spending, by state, 2004
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73
78
83
88
4,000 5,000 6,000 7,000 8,000
Spending (Dollars)
C
ompo
site
Mea
sure
of
Qua
lity
of
Car
e
Source: Data from AHRQ and CMS.
Tweaking will not help…
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Market has changed since the current system was designed Shift from infectious diseases to chronic conditions Population life expectancy extended from late 40’s to late 70’s
US reimbursement model has created “perverse incentives” to increase spending Fee-For-Service (FFS) incentivizes volume over quality Third party payer system shields the consumer from the true costs of
care 2001 IOM Report the “Quality Chasm”
Working harder will not be able to correct the fundamental deficiencies Restructuring is needed to create a system that produces safety,
effectiveness, patient-centeredness, timeliness, efficiency, and equity as a reliable property of the system
Rationale for promoting the ACO model Payment reform
FFS payment structure seen as a one root cause of fragmented, poor quality and low value care delivery
Capitation and global payment schemes require a certain level of sophistication and integration
P4P mixed results ACO structure considered mechanism to enable transformation of the
delivery system Strong interest in improving quality and decreasing costs to maximize the value
equation Many best practice models in terms of value are IDSs (e.g. Geisinger, Kaiser
Permanente, Intermountain, Mayo, Cleveland Clinic) Need to separate performance risk from insurance risk and place accountability for
performance risk where those decisions are made – at the point of care Bundled and global payments are a key enabler
Reduces the need to micromanage the delivery process Encourages redesign and innovation to maximize efficiency and performance Supports collaboration and integration
How are ACOs different in design and operation?
How is this Different from IDS Strategy of Late 1990’s? Performance vs. Insurance Risk IDS strategies of late 1990’s
These were mainly defensive strategies to create leverage with health plans IPAs formed primarily to create a contracting structure for greater leverage and control Groups formed to be able to take on and manage capitation payments Hospitals bought physician practices to create leverage, generate referrals and increase FFS revenue
There was not much focus on creating a truly integrated system of care capable of taking on performance risk Quality measurement was in a nascent stage and there was not much focus on cost efficiency, quality,
transparency nor overall performance Lack of good risk adjustment methodologies and performance assessment lead to some organizations
taking on inappropriate levels of insurance risk Very little attention to physician management and productivity dropped in owned practices Information Technology in general and EMR technology in particular was expensive and immature
ACOs are designed to take on and manage performance risk Goal is to create a structure capable of balancing cost, quality, access and service to optimize
care for a defined population across the entire system Performance measurement to evaluate the quality of care and to prevent potential overuse (in
fee for- service organizations) and underuse (in capitated ones) is a cornerstone of the Accountable Care Organization (ACO) model
Mature IT today creates the opportunity to wire organizations and create new levels of integration, transparency and performance management
Changing Hospital Incentives
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Current focus: revenue growth Often driven by large capital investments with high fixed costs Incentives for more use
Extra MRI means more revenue Foregoing MRI means NO revenue Only way to make margins is to use more or charge more
Always leads to greater health care spendingBetter focus: spending targets & shared savings
Preserves margins Provides incentive to avoid increases in capacity (and to reduce
capacity where feasible); and to improve care in domains previously ignored: care coordination, end-of-life
Reimbursement Models and Delivery Structure
Source: ACO Toolkit. Brookings-Dartmouth Collaborative 2011
Key Functions an ACO Must Perform Patient Attribution
Ensure that providers believe they are fairly accountable for a particular patient
Budget Development and Management Establish benchmarks Case Mix Adjustment Track and manage the budget Determine level of risk with payers
Manage Payment Models and Incentives Determine how to distribute shared savings to best incentivize
providers Performance Measurement
Measure and track quality performance
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Patient Attribution Virtual assignment currently exists b/c most patient see one or
two PCPs and most PCPs admit to one or two hospitals ACO must agree to attribution method although can use
different attribution methods for different payment models Accountability for assigned patients lies with the ACO, not the
individual provider Important to understand that once patient is attributed, the
ACO is responsible for ALL costs of that patient, inside and outside of the ACO
Methods Patient selection of PCP Utilization patterns
Ensure that high-cost patients with an established provider are not referred out or discontinued after formation of ACO
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Shared savings: Overview
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The principal features of a “shared savings” model include: Payers and ACOs establish budget targets for the total health
spending of ACO’s members. Payers may continue to make payments on a fee-for-service
basis. At the end of the year, the actual and target spending are
reconciled. If the actual spending is less than the target, and if the ACO has
performed adequately on access and quality metrics, the ACO, payers, employers, and consumers share the difference (“shared savings”).
Developing a Budget Analysis of 2+ years of historical data Benchmarks established
Cohort approach Claims lag an issue Ensuring similar populations Incentive for better coding may distinguish populations Decreasing ability to identify control population
Budget Projection approach Avoids issue of loss of control population Build historical trends into projected benchmarks which may reward high cost providers Difficult to account for system-wide changes Accurate exposure data (monthly membership) extremely important for calculation of
PMPM costs Various trend project methods
Need to analyze care management investments relative to potential shared savings benefit
Important to consider whether and how benchmarks should be updated
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ACO and Payment Continuum
Source: ACO Toolkit. Brookings-Dartmouth Collaborative 201123
Manage Payment Models and Incentives ACO will have to manage a complex mix of
reimbursement methods Likely will have a mix of reimbursement schemes for some
time, including FFS Need to determine model for shared savings distribution
that will incentivize the right providers for the right behavior
Must have the ability to distribute payments and shared savings accurately
ACO governance will need to determine how align financial and non-financial incentives such that functional groups are not working at cross-purposes
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Performance Management ACOs will have to demonstrate performance transparency Achieving selected quality targets will be a prerequisite for obtaining
shared savings May include credit for improvement vs. hitting absolute benchmarks
Investments in redesign and infrastructure for care management may need to precede reimbursement through shared savings
Standardized metrics and benchmarks are evolving Overuse
Avoidance of antibiotic use for adults with bronchitis Population health
Breast screening Chronic care
Diabetic A1c control Outcomes
30 day post-MI mortality rate Outcomes measures should be risk-adjusted
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Performance Reporting Highly Dependent on IT Infrastructure Basic IT Infrastructure
Administrative data Claims data
Intermediate IT Infrastructure Clinical data Lab data Registries
Advanced IT Infrastructure EHR ACO-wide Direct patient-generated information about experience Outcome measures
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Health Information Technology Meaningful Use incentives driving broad adoption of
EHRs Health Information Exchanges (HIEs) will help with
comprehensive information needed for care management Data warehousing and analytic resources will be essential Care management
Disease registries are a minimum requirement Clinical decision support – reminders, alerts Referral tracking Care plan documentation Case management system
Patient Health Record (PHR)
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What are the critical success factors for ACOs?
What are the Challenges to ACO Development The historical lack of collegiality and collaboration between the various organizations,
in particular, physicians and hospitals The need for strong leadership and skills to address the cultural, legal, financial and
resource-related challenges to creating new provider organizations Ensuring a strong primary care base with adequate infrastructure and resources to be
accountable for a full scope of responsibilities Governance and creating joint accountability Determining who will and how to distribute revenue and "shared savings“ Cultural and workflow shifts necessary to implement more efficient and high-quality
models of care delivery Holding physicians accountable for productivity, quality AND efficiency at an
individual AND population level Implementation of necessary infrastructure, especially IT, in a capital constrained
environmentSource: McKethan A, McClellan M. Moving from volume-driven medicine toward accountable care. Health Affairs Blog. August 20,
2009. (Accessed October 26, 2009, at http://healthaffairs.org/blog/2009/08/20/movingfrom-volume-driven-medicine-towardaccountable-care/)
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ACO Critical Success Factors Culture
Collaborative Transparent Progressive Performance driven
Clinical leadership Legal and financial expertise Effective governance structure Strong and effective primary care base redesigned to
support care coordination Integrated and effective administrative and clinical IT
infrastructure and operations
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How should providers evolve to or participate in ACOs?
ACO Considerations Local market conditions Assessment of readiness Determine alignment strategy (alone, strengthen current
partnerships, new partnerships) Establish governance and management structure Ensure have right leadership, experience and mix of skill-sets Determine capital requirements Determine IT strategy Establish quality and operational improvement methodology Integrate with other changes (e.g. meaningful use, ICD-10,
PCMH) Define a time-boxed tactical pathway to achievement of an
ACO organization with effective tracking and course correction mechanisms
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Critical Success Factors for Primary Care Effectiveness in an ACO
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Complete & timely information about their patients and the services they are receiving
Technology and skills for population management and coordination of care
Adequate resources for patient education and self management A culture of teamwork Coordinated relationships with specialists and other providers Ability to measure and report on the quality of care Infrastructure skills for the management of financial risk Commitment by leadership to improving value as a top priority
In closing, Berwick comments… Triple Aim
Berwick’s highest priority as head of CMS Better care for individuals, described by the six dimensions of health care performance listed in the
Institute of Medicine’s 2001 report “Crossing the Quality Chasm”: safety, effectiveness, patient-centeredness, timeliness, efficiency, and equity.
Better health for populations, though attacking “the upstream causes of so much of our ill health,” such poor nutrition, physical inactivity, and substance abuse.
Reducing per-capita costs (utilization and unit costs).
Recent Comments re Goals of ACOs Reducing dependence on hospitals. Instead, "patients will be home where they want to be." Using a proactive approach. ACOs will advance ways to help people stay healthy. Using a rich trove of healthcare data. ACOs will use data-driven approaches such as patients registries. Taking an innovative approach. ACOs will draw upon the best advances in models of care. "We want
to help integrated care to thrive in America.” Maintaining and executing plans. "I don’t view the ACO as primarily a financing mechanism, It's a
care delivery system.”
“Successful redesign of health care is a community by community task. That’s technically correct and it’s also morally correct, because in the end each local community — and only each local community – actually has the knowledge and the skills to define what is locally right.”
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