How to Spot a Unicorn -or- The Accountable Care Organization Identified and Explained

What You Need to Know about ACOs

In a January 2011 news report, National Public Radio journalist Jenny Gold likened accountable care organizations (ACOs) to “the elusive unicorn: everyone seems to know what it looks like, but no one has actually seen one.”

The ACO has been a relatively hot topic since it was introduced as a provision in the new health law last year. The acronym fast achieved industry buzz phrase status as many in our industry began to eagerly hunt the proverbial unicorn without benefit of details or a roadmap. Most are aware ACOs fit in context with a better model for delivering care to Medicare beneficiaries; otherwise specifics are sketchy.

Here is the key information you need to know about ACOs—the corralling of the unicorn so you can have a better view.

Accountable care organization
əˈkountəbəl | ke(ə)r | ˌôrgəniˈzā sh ən

1 a type of payment and delivery reform model that seeks to tie provider reimbursements to quality metrics and reductions in the total cost of care for an assigned population of patients* *—as defined on Wikipedia
2 a recognized legal entity under State law and comprised of a group of ACO participants (providers of services and suppliers) that have established a mechanism for shared governance and work together to coordinate care for Medicare fee-for-service beneficiaries*
*—as defined by the Centers for Medicare & Medicaid Services

An ACO is an organized network of healthcare providers (hospitals, physicians, specialists) and is accountable to patients and payers, specifically Medicare. Provider participants collectively share responsibility for the healthcare of a group of patients for a set period of time. Specifically under the new law, an ACO must commit to care for at least 5,000 Medicare patients for a minimum of three years. The goal of an ACO is to improve the quality of care for patients while achieving cost savings, beyond the ACO’s historic national benchmark.

The intended benefit for patients is coordinated, well-rounded and more thoughtful care. Rather than receiving disjointed snapshots of care through referrals and provider visits, patients in the fold of an ACO would be part of a broader network. It’s kind of a “why buy the ingredients when you buy the cake already baked?” approach to healthcare.

The intended benefit for providers is the ability to give more efficient, results-oriented care while achieving cost savings that may then be shared amongst provider participants. Though still earning fees for service, ACO participants have the incentive of sharing in the savings, without full-blown capitation.

The intended benefit for everyone is aligned with the goals of ACOs in general: measurably better care and lower costs. Medicare is beleaguered, lumbering and struggling as an entity; those in positions of national leadership in health reform are banking on ACOs to achieve cost reductions and enhance care now while making the system viable for the longer term.

Under the provision of ACOs, providers will continue to receive fees-for-service, and patients will be free to select physicians outside the ACO network. The latter point is a key differentiator of ACOs from HMOs or health management organizations. This structural nuance is intended to avert possible control of patient referral patterns that some see as the bane of the HMO model (e.g. adverse selection). Additionally, antitrust reviews are to be expedited and coordinated by both the Federal Trade Commission and the U.S. Justice Department to ensure that no ACO is able to wield market power that drives prices up while keeping competition down, at least in theory.

The highly anticipated proposed rules were released on March 31, 2011 with a 60 day comment period. CMS received more than 1,200 comments, many of whom found ACOs bearing too many requirements with too few rewards. At the first ACO Learning Development Session on July 21, CMS Administrator Donald Berwick acknowledged the proposed rules caused debate and discourse and believes the final rule will take into account the thoughts and opinions of those who commented. Nonetheless, ACOs are part of the health reform structure and are poised to play a major role in our healthcare system moving forward.

Some of the comments from nationally recognized healthcare opinion leaders include:

• The American Academy of Family Physicians—“…The AAFP is concerned that the Medicare ACO program as currently proposed will fail to offer the potential benefits of better care for individuals, better health for populations, lower per capita costs for Medicare beneficiaries and improved coordination among physicians…"

• The Mayo Clinic—“…it (the rule) creates a sense of mistrust toward providers in a manner that suggests that CMS would not be a trustworthy and effective partner in the innovation that is necessary for us to really make progress in reform…"

• The Medicare Payment Advisory Commission (MedPAC)—“…Providers may be reluctant to commit time and money to reorganize the delivery system to better coordinate care and improve quality, if rewards are uncertain and difficult to calculate…"

Unicorn Sightings: ACO Dates and Milestones
Implementation deadline for ACOs is January 1, 2012.

In March 31st of this year, the federal government published proposed rules to guide the operation of ACOs. These rules establish comprehensive structural and quality requirements. HHS also released information for patients and providers to lay groundwork for ACO implementation. Upon release of proposed rules, many called for immediate review and modification.

On May 17th of this year, Centers for Medicare & Medicaid Services (CMS) unveiled three ACO initiatives to guide ACO structure and approach: the Pioneer ACO Model, Accelerated Development Learning Sessions and the Advanced Payment ACO Model.

Recent and upcoming ACO deadlines include:
June 6, 2011- NPRM comments closed
June 17, 2011- Cut-off for comments about advanced payment initiative to The Innovation Center
June 20 - 22, 2011- Training for Accelerated Development Learning
Session 1 in Minneapolis, also viewable by webcast
Session 2 September (TBA); San Francisco Bay, CA area
Session 3 October (TBD); Philadelphia, PA area (tentative)
Session 4 November (TBD); Atlanta, GA area (tentative)
June 30, 2011 - Due date for Letter of Intent for organizations interested in participating in the CMS’ Pioneer ACO model
August 19, 2011 - Application deadline for the Pioneer ACO Model
January 1, 2012 - Deadline for ACO implementation

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