ACOs – The New Buzz

March 21

When the Patient Protection and Affordable Care Act of 2010 was passed, the focus was mainly on the increased or decreased health care options for the consumer. One area of this Act that has certainly become the new "buzz" is accountable care organizations that include a date of January 1, 2012 for the inception of the structure.

The overall purpose of the formation of these groups is to increase efficiencies and, thus, reduce waste and cost. The main objective is to improve patient care, and the concept is truly an integration of local hospitals, medical groups, payers and other ancillary providers that seek a shared savings and desired outcomes. ACOs would manage all the health care needs for a minimum of three years for its beneficiaries and, although outlined for Medicare, some ACOs are being designed for private insurance patients as well.

For those of us that have lived within the health care industry for a few decades, we remember the beginning of the DRGs, HMOs, PPOs, etc. Now with the ACOs on the horizon, it will take time, understanding and a lot of communication before everyone clearly understands what they are. The premise makes sense - improve patient care and make all players accountable by putting the providers at some financial risk.

The American Hospital Association, in a HealthLeaders article from November 20101, outlined some major components of an ACO:

  1. The group must have a formal legal structure
  2. The ACO must employ enough primary care professionals to treat their beneficiary population. This population must be a minimum of 5,000.
  3. A minimum of 3 years participation is required
  4. Knowledge of the participating health care professionals to support the beneficiary assignment
  5. A structure that must include both clinical and administrative systems
  6. Processes that support evidence based medicine
  7. A reporting structure that demonstrates the adoption of patient centered care.

According to a recent analysis report in HealthLeaders, the first documented ACO between competitive health systems is in Omaha and is an integration of The Nebraska Medical Center and the Methodist Health System that has formed the Accountable Care Alliance. Although relatively new, they are starting this new venture with volume discounts, reducing hospital infection rates and other patient care efficiencies.

Another example is the ACO in Columbia, SC — Palmetto Health. The formation of a shared entity to contracting payers includes employed and allied physicians. This formation of the group, Palmetto Health Quality Collaborative, offers over 1,000 of Palmetto's medical staff a structure that targets outcomes and efficiencies. Although a board governs the ACO, it includes physicians, the president and CEO of Palmetto and board members. This group of physicians includes those in private practice, 170 physicians employed by Palmetto and the University of SC School of Medicine faculty physicians.

More and more articles are in the news about ACOs and the Centers for Medicare and Medicaid Services will release detailed rules within a few weeks. We have 9 more months of 2011 to watch the news and observe physicians, hospitals and insurers as they compete for the leadership roles. One article, Accountable Care Organization-Explained2, on the NPR website explained it quite clearly. "ACOs have been compared to the unicorn: Everyone seems to know what it looks like, but nobody's actually seen one."

1HealthLeaders article:

2NPR article:

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