Value-Based Care News

Accountable Care Organizations Need Financial Accountability

By Jacqueline DiChiara

- Accountable care organizations (ACOs) necessitate the recognition of collective accountability for a distinct population’s cost and quality of care. Although they may be slowly on the rise within the healthcare industry, their successful execution is expensive. Nonetheless, reported overall Medicare savings are sizable. Their mainstream adoption away from an initial experimentation stage of sorts is yet to be formally implemented. Healthcare organizations actively push for their adoption, citing the advancement of economically smart quality care. As ACOs continue to expand, what’s next?

Accountable Care Organizations

Richard Slavin, MD, CEO of the Palo Alto Medical Foundation, spoke with RevCycleIntelligence.com about the future of ACOs and the Pioneer ACO Model, the importance of patient engagement, and greater cost and reimbursement implications. His insight paints a clearer ACO picture for the healthcare industry at large.

RCI.com: What do you think the greater implications of the Pioneer ACO Model are for the healthcare industry at large?

Richard Slavin: We are not participating in the Pioneer ACO Model. Our Medicare focus and future plan are to expand the Medicare Advantage program in our community. We have a 20-year history with the Medicare Advantage program and are optimistic that we’ll be able to move the majority of our seniors into that program.

RCI.com: I’m interested in your perspective on how CMS’ recently announced physician fee schedules and payment policies are influencing healthcare payers and providers.

RS: There’s been no significant increase in reimbursement to physicians for care of Medicare patients in the past 15 years. Inflation in this period of time has probably been thirty to thirty-five percent. This deficiency in Medicare reimbursement to physicians has resulted in cost shifting to the commercial market to subsidize the under-funding from the federal government for care for Medicare patients.

Quality metrics in California have historically been focused on primary care physicians’ performance of specific preventive care tasks. Meaningful metrics are needed to measure the performance of specialists compared to national benchmarks. I expect that our high performance will be recognized.

RCI.com: How is the transition to value-based care essentially unfolding for payers and providers? What glitches require ironing out? What are the leading primary concerns?

RS: In both the Medicare and in the commercial ACO models, patients have historically not been aware they are in a program focused on managing their total cost of care. I understand in the Medicare Pioneer program this attribution will be made apparent to the patients going forward. Critical to managing the total cost of care is patient engagement and patient education, support of self-management, etc. Having patients aware that they’re participating in a program that’s focused on enhancing the quality of their life and the efficiency of their care is critical. It can’t be done by the organization alone. It requires patient engagement.

In our commercial ACO program with Blue Cross, we’re actually incentivized to connect with our patients and have them actually acknowledge in a document format they are going to be partners with us in trying to manage their care to improve quality and reduce cost.

Since an increasing percentage of the population has high deductible insurance, it is important that there is transparency in pricing and transparency in quality. We have had our ambulatory pricing for physician care as well as for laboratory tests and imaging procedures on our website for over a year.

RCI.com: How are ACOs helping advance and improve coordinated, quality care?

RS: In the past, there were incentives to minimize in-patient length of stay and the frequency of hospitalizations. We have performed well in achievement of these objectives. Now our opportunity is to help the hospitals be more efficient in managing their costs, and work more on preventing readmissions in our effort to reduce the cost for managing a population of patients.

RCI.com: How will ACOs change the game regarding reimbursement and cost savings?

RS: In the commercial ACO model, there are rewards to the physicians for helping large employers “bend their cost curve.” Most of our commercial ACO work has been with large employers in Silicon Valley with real success in reducing their actuarially anticipated spend. We share in those savings with the employer. The insurance company acts as the intermediary in providing the data.

There are different definitions of accountable care organizations. I think that the most efficient long-term system is the capitated model, where there’s a finite amount allocated to the healthcare delivery system, which has to evolve to provide superb care with a predetermined fixed dollar amount per patient. ACOs are transitions from a pure fee-for-service model to a population management model.

The change from volume to value is something we’re very supportive of. We are committed to moving as many of our PPO patients as possible to a commercial ACO model in preparing our organization to be accountable for the total cost of care for all of our patients.