Early Thoughts on Proposed ACO Rules

Written by Eric Dishman (3/31/11)
Source: Intel Blog

Hear ye, hear ye, read all about it! For those of you who have been waiting with bated breath (you know who you are!), the U.S. Department of Health & Human Services has just published the proposed rules and guidelines for Accountable Care Organizations (ACOs) and the Medicare Shared Savings Program (SSP). You can download the 428-page document here and see the official press release here. Though, unless you are a policy or healthcare reform geek (which I guess I am becoming, frighteningly enough), you might want to wait for the inevitable summaries to be done by various consulting firms, non-profits, and individuals. I will post some of the good ones here when I see them.

These rule-makings around ACOs are a major component of the Affordable Care Act signed by President Obama last March, though most citizens and press outside of the healthcare industry have no clue what this is all about. ACOs are the primary mechanism for beginning to shift the American healthcare system from a volume-driven to a value-driven paradigm. In other words, today, the majority of healthcare is paid based on the volume of face-to-face visits, labwork, and prescriptions generated more than the value of the care provided. And these payments occur regardless of whether the treatments given (and charged for) are effective or helpful. The strategic intent of the health reform bill is to shift to a mode of payment that focuses much more on rewarding the quality of care over the volume of care.

There are three primary aims of these reform efforts (sometimes referred to as "the triple aims" or as "Berwick's triple aims" named for Don Berwick, the current Administrator for the Centers for Medicare and Medicaid Services). First, the goal is to provide better care for individuals. Second is to improve care for populations. And third is to lower the growth in healthcare costs and expenditures. ACOs are one of many tools to achieve these three aims, and healthcare providers and companies have been eager to see what the Secretary would propose as the specific requirements for becoming an ACO.

Basically, an ACO is a group of care providers--usually centered around primary care physicians--who commit, according to the proposed rules released today, for a minimum of three years to manage the overall care and costs of at least 5000 Medicare patients. And the ACO has to have a legal structure (though they are very flexible on the different kinds of structures permissible) that allows the organization to receive and distribute payments to all its care providers in the management of the care.

So imagine, for example, several physician practices, a hospital, and a home care agency within a particular town coming together to form an ACO to care for at least 5000 Medicare beneficiaries in that community. They would be paid what is often referred to as a "bundled" or "global payment" annually to care for all of the health needs of those patients, and they could participate in the Shared Savings Program by which they could get bonuses based on helping to reduce healthcare expenditures while boosting quality. Lest you think these providers would just ignore the needs of the sickest patients to keep their costs low and leave more shared savings in their pockets (and I should say that I have never met any clinicians in our 10+ years of fieldwork who would be so inclined--the majority are good people who went into medicine to help people), there are clear rules and data-driven quality measurement mechanisms that prevent that from happening.

I am particularly heartened to see some of the following language in the proposed rules:

• The ACO shall define processes to promote evidence-based medicine andpatient engagement, report on quality and cost measures, and coordinate care, such as through the use of telehealth, remote patient monitoring, and other such enabling technologies (p.17)

• The ACO shall demonstrate to the Secretary that it meets patient-centerednesscriteria specified by the Secretary, such as the use of patient and caregiver assessments or the use of individualized care plans (p.17)

• An ACO will manage resources carefully and respectfully. It will ensure continual waste reduction, and that every step in care adds value to the beneficiary. An ACO will be able to make investments where investments count, and move resources to meet beneficiaries' needs. Because of its capabilities with respect to prevention and anticipation, especially for chronically ill people, an ACO will be able to continually reduce its dependence on inpatient care. Instead, its patients will more likely be able to be home, where they often want to be, and, during a hospital admission, they receive assurance that their discharges will be well coordinated, and that they will not return due to avoidable complications (p. 25)

• An ACO will be proactive by reaching out to patients with reminders andadvice that can help them stay healthy and let them know when it is time for a checkup or a test (p.25)

• An ACO will collect, evaluate, and use data on health care processes andoutcomes sufficiently to measure what it achieves for beneficiaries and communities over time and use such data to improve care delivery and patient outcomes (p. 25)

• An ACO will be innovative in the service of the three-part aim of better care forindividuals, better health for populations, and lower growth in expenditures. It will draw upon the best, most advanced models of care, using modern technologies, including telehealth and electronic health records, and other tools to continually reinvent care in the modern age. It will monitor and compare its performance to other ACOs, identify and examine new processes for care improvement, and adopt those approaches that are demonstrated to be effective (p.25)

While I have several hundred more pages to go, my initial read shows some very promising directions. The rules feel very innovation-friendly and leave lots of flexibility and experimentation for communities to try different approaches to setting up ACOs. The focus on "patient engagement" shows a much-needed momentum around providing tools and expectations for patients to be a more proactive and responsible party in our own care. The explicit references to the use of telehealth and remote patient monitoring and the calling out of the need to move care to the home shows that CMS "gets it" in terms of the need to "place-shift" (a topic I bring up frequently in this blog) where care occurs away from more expensive settings like hospitals. And the requirements for incorporating and using data-driven, evidence-based tools to drive best practice care and continuous innovation/improvement will help us finally achieve a 21st century healthcare infrastructure that is scalable and competitive, internationally.