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New Approaches In A New World, Starting With ACOs



September 23rd, 2011

If the last few months have made anything clear, it’s that the fiscal climate has changed and there are no longer any sacred cows.  Medicare and other essential health programs are on the chopping block, despite their immense popularity and the fact that they stand between life and death for millions of the most vulnerable people in our country.  As cuts to these health programs loom, the imperative to use our health dollars wisely becomes even more urgent.

If it’s time to discard the old ways of doing business, there’s no better place to start than with Accountable Care Organizations, or ACOs.  At the very heart of the philosophy that underlies health reform, and with a history of support from both Republicans and Democrats, ACOs are a model of care that incentivizes medical groups and hospitals to reduce costs while providing high-quality care.

An ACO is a network of health providers – hospitals, primary care doctors, specialists, advanced practice nurses, physician’s assistants, home health care providers and others.  Some are private; others are public.  Under the terms of the Affordable Care Act, an ACO contracts to meet the health care needs of at least 5,000 Medicare beneficiaries for a minimum of three years.

ACOs Can Help Patients And Save Money Through Care Coordination …

A primary function of ACOs, and what makes cost savings possible, is that they coordinate care for their patients.  This is tremendously important for the oldest and sickest patients who often have multiple health problems such as diabetes, high blood pressure, coronary artery disease, osteoporosis and early Alzheimer’s.  In our current system, these patients struggle mightily to keep track of medications, test results and medical instructions.  It’s no small task.  Older adults with five or more chronic health conditions have an average of 37 doctor visits, 14 different doctors, and 50 separate prescriptions each year.  That would be a challenge for a healthy person to coordinate, and it’s overwhelming for many of those who are sick.

These patients, who are the heaviest users of our health care system, also bear the greatest burden when our system offers poor quality care.  They are at highest risk for medical errors, hospital-acquired infections, and care that makes them sicker instead of better.

Talking to these patients offers lessons in why quality, coordinated care is so important.  One told us that trying to navigate the health system is like being in a foreign country with no passport, no ability to speak the language, and no translator.  Their family caregivers say coordinating care for a sick spouse or parent is a full-time job.  They say they create spreadsheets to try to keep medical appointments, medications and test results straight – often without success.  They talk about a health care system that is failing the patients who depend on it the most.

Coordinating care isn’t just humane.  It’s also smart.  Because when care is coordinated, test results are shared with various doctors rather than tests being duplicated.  Patients with early Alzheimer’s who go into the hospital for a heart attack don’t get sicker because they are given medications contraindicated for those with dementia.  Patients with osteoporosis get fall prevention care so they don’t fracture a hip while being treated for diabetes.  And when patients are discharged, they are less likely to be re-admitted because they went home without the help they needed to complete their recovery.

The poor quality care we are delivering also is costing us dearly.  We’re wasting billions of health care dollars by making patients sicker.  It’s unsustainable and, with deep cuts looming, we don’t have time for slow, incremental change.

…. But Only If We Maintain The Proposed Rule’s High Standards

If implemented right, ACOs can make a real difference by improving the quality and reducing the cost of care.  With that in mind, this spring the Administration issued a draft rule to govern ACOs.  It provides strong incentives to save money by avoiding unnecessary and duplicative tests, as long as the quality of care improves.  The resulting savings would be split between the Medicare program and the ACO.  But private purchasers of health care can reap the same benefits, when ACOs offer better and more efficient ways to deliver and pay for care for all patients.

As advocates for patients and payers, we saw a lot to praise in the proposed rule.  We liked that it had high standards, focused on making care more patient-centered, provided payment incentives for care coordination, and used patient experience to assess and improve care.

Many in the provider community reacted very differently.  They demanded greater upfront incentives to create ACOs, a greater share of the cost savings, and in some cases less accountability.  And as providers challenged the proposed rule, opponents of health reform joined them in trashing it in ways that spiraled nearly out of control.

It’s time for a new dynamic.  The disagreement between providers and patients is, at its core, a fight among family because in the end, we want the same thing: a health care system that works.

The world is changing.  We seem to be entering a new era of permanent government austerity.  Life-saving programs are on the chopping block, and Medicare and Medicaid are prime targets.  The only way to avoid deep cuts in benefits or payments to providers is to adopt reforms that reduce cost and improve the quality of care.  ACOs can do that, if we maintain essential features in the Administration’s proposed rule.  Only then will ACOs offer real hope to improve the quality and coordination of care and use our health care dollars more wisely.

Patient advocates and providers must work together to get ACOs right, and opponents of reform must stop fanning the flames of disputes for political gain.  Our nation is facing a health care crisis, exacerbated by the grim fiscal realities.  If we want better health care at lower cost, we simply have to make fundamental changes in the way we do business.  Let’s start by refusing to lower the bar on ACOs and instead come together to support a strong ACO rule and encourage the development of ACOs that will provide better care for patients.

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3 Trackbacks for “New Approaches In A New World, Starting With ACOs”

  1. Pioneer ACOs: Moving Toward Needed Transformation In Health Care « Campaign for Better Care
    January 4th, 2012 at 11:05 am
  2. Welcome Progress, But the Final Verdict on ACOs Is Yet to Come « Campaign for Better Care
    October 28th, 2011 at 4:12 pm
  3. Welcome Progress, But the Final Verdict on ACOs Is Yet to Come « From the Desk of… the National Partnership for Women & Families
    October 28th, 2011 at 9:50 am

2 Responses to “New Approaches In A New World, Starting With ACOs”

  1. Debra Ness Says:

    If designed with patients as the central focus, new models of care like ACOs will not perpetuate “business as usual” in health care. In fact, new delivery models hold great promise for Medicare beneficiaries with the highest risks and costs. Nearly four in five Americans 65 or older have multiple chronic conditions. As more baby boomers age into Medicare that number will continue to increase. These are the very people who can benefit directly from a more patient-centered approach – improved care coordination, medication management, and team-based care. While there are some excellent capitated plans providing patient-centered care, the majority of beneficiaries remain in the traditional Medicare program. Ultimately, we need to move away from the perverse incentives of fee-for-service and find new ways to both improve care for these beneficiaries and use health care dollars more wisely. The Medicare ACO offers an opportunity to test one alternative approach. But like with any care model – the bar needs to be set high enough with respect to standards and accountability so that real improvement can be achieved. Otherwise it will be back to business as usual.

  2. Jeff Goldsmith Says:

    The ACO is a model “which incentivizes hospitals and medical groups to reduce cost” while continuing to pay them fee for service. The rewards for individual actors (particularly hospitals and specialists) of continuing business as usual far outweigh the modest rewards for reducing cost escalation.

    Rather than eliminating an already crippling complexity of Medicare’s fee for service billing system, the ACO overlays a new level of complexity with a profusion of poorly conceived reporting requirements, increases transaction costs and diverting provider time from direct patient contact into typing into their computerized record keeping systems. And it does so without meaningfully involving the patient in managing their own health risks, or providing them any economic reward for collaborating in cost reduction. The ACO as conceived in the March regs is a fundamentally flawed concept which represents a diversion of policymaker and provider energy from what the authors correctly argue is an essential task.
    It wasn’t provider selfishness or political mischief making that led to an overwhelming negative reaction to these regs, but rather a richly merited reaction to a poorly conceived program.

    Population health measures such as ACO’s make little sense in a population where risks and costs are highly concentrated in subpopulations within the Medicare enrollment base. It’s attacking those subpopulations directly where the real rewards lie: in protocol driven care for the very sickest patients, and for critical subgroups like those with manageable chronic conditions like congestive heart failure or diabetes. Health plans which capitate providers are a better way of achieving these focused health improvement efforts than contracting directly with providers to do so.

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