What is an accountable care organization and why should you care?

By Posted : 01/04/2012

group of doctorsJust when you thought the health care industry had exhausted the alphabet coming up with acronyms -- HMO, PPO, POS -- along comes a new one: ACO, short for "accountable care organization."

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A lot of models have promised to revolutionize health care, but some experts believe ACOs are the real deal.

"This really is going to transform health care," says Rich Temple, executive consultant for Beacon Partners, a health care management consulting firm headquartered in Weymouth, Mass.

The concept has been around for several years, but is gaining attention now because it's included in federal health care reform.

An accountable care organization typically includes a hospital, a physician group and a health insurance plan that agree to work together to improve care for patients, says Lisa McDonnel, senior vice president of national network strategy and innovation for UnitedHealthcare.

The components of an ACO share information and coordinate care to eliminate duplicated services and make sure patients get the follow-up attention they need to prevent unnecessary complications. Payment to providers in accountable care organizations is based on value over volume.

Less duplication, more follow-up

"Patients who visit their doctors more frequently will likely notice more of the changes compared to someone who may only go to the doctor once a year," says Raegan Armata, product director for accountable care programs at Cigna.

Anyone with multiple, chronic conditions knows the frustration of having to repeat information to several doctors, undergo duplicate tests and deal with lost records. Ideally, if you're in an ACO, doctors share information electronically and coordinate the care so you get the right services at the right time.

"Doctor No. 2 has a sense of what doctor No. 1 did," Temple says.

What would such patient-centric care look like?

You might notice an expansion of evening and weekend hours, increased use of technology (such as electronic medical records), and proactive efforts to reach out to you, Armata says. A doctor's nurse coordinator might call a patient to make sure the patient had scheduled all her preventive services, offer help for a condition such as diabetes, or make a referral to a health improvement program for goals such as weight loss or smoking cessation.

"Patients who have been recently discharged from a hospital or emergency room may receive a call from the doctor's office to schedule follow-up care or to ensure the patient knows how to take any medications that may have been prescribed," Armata says.

ACOs are part of Medicare insurance reform

Starting next year under the federal health care reform law, hospitals and medical practitioners that serve Medicare patients can form ACOs. Providers must achieve certain quality standards to earn the financial incentives from the Medicare program.

The emphasis on quality, not just on savings, is a key feature.

"It's whispered in the industry that perhaps ACOs are the HMOs of the 21st century," Temple says. "ACOs are a little different because the care given is going to be graded in terms of quality."

Medicare patients aren't the only ones who will encounter ACOs. Health insurance companies have been working with medical providers to do pilot ACO projects around the country. They see promise in the savings that ACOs could provide.

UnitedHealthcare, which was involved with forming an ACO in Arizona (including Tucson Medical Center and local providers) several years ago, will launch pilot ACOs next year.

"We are in an exciting time in health care, with real change being driven across the country," McDonnel says.

Cigna has implemented or is actively planning about 30 accountable care initiatives. Its current programs serve working-age patients and their families covered by employer-sponsored health plans rather than Medicare, but it will likely expand into the senior Medicare market.

Challenges lie ahead

"One of the challenges we face is managing expectations," Armata says. "The work we're engaged in isn't easy. This is changing the way physicians provide care to their patients, and it does not happen overnight."

Cigna has been participating in such initiatives since 2008.

"While we have early results that show their value, we expect it will be several years before we see the full effect of these programs," Armata adds.

Another challenge is the sheer logistics of coordinating care across different providers. Coordination will require new systems for financial and patient tracking among health insurance firms, physician groups and hospitals.

"Just as the ACO concept is getting out of the gate, the notion of billing is going to get messier," Temple says.

And although the model may show signs of improving the system, "You're not going to achieve nirvana right out of the box."





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