What You Need to Know about ACOs

Accountable care organizations (ACOs) have taken a prominent position in the healthcare reform movement as part of cost-saving strategies. But in the 2011 National Physicians Survey conducted by HCPlexus and Thomson Reuters, a full 45% of the nearly 3,000 participating physicians said they did not know what an ACO was.¹

“The other half of physicians who have read the ACO regulations are blown away when they read them,” says Rodney Hochman, MD, a rheumatologist and executive vice president of the Swedish Medical Center in Seattle.

So, what exactly is an ACO? “The broadest definition of an ACO is any organization that is clinically and fiscally responsible for the entire continuum of care for their patients. The key words in this definition are ‘fiscally’ and ‘entire continuum,’ ” says Joseph Golbus, MD, president of the NorthShore University HealthSystem Medical Group and clinical associate professor at the University of Chicago Pritzker School of Medicine.

“We rheumatologists have always been responsible for the care of our patients,” Dr. Golbus says. “But now, with ACOs, the financial risk is being transferred from health plans and payers to providers. That changes things. In an ACO, we are fiscally responsible for entire continuum of care for our patients. Not just inpatient or outpatient care, but also extended care, hospice, the whole deal,” he adds.

In the ACO model, the primary-care physician is the gatekeeper. A real fear among rheumatologists and other cognitive specialists, who primarily provide evaluation and management services, is that they’ll be left on the side of the road, as Dr. Hochman puts it. “Now is the time to make sure they’re playing a significant role,” he stresses, because ACOs are on the verge of becoming mainstream.

Medicare and Medicaid ACOs

The broad goals of ACOs are to encourage care integration, improve care quality, and realize cost savings. According to an often-quoted statistic, the average American on Medicare is cared for by two physicians and five specialists, more if the person has a complex chronic disease. Coordination of care is an obvious problem.

“This is a fundamental change in the delivery and reimbursement model that moves to population healthcare,” says Warren Skea, PhD, director of PwC’s Enterprise Growth Practice, who was a keynote speaker at an ACR Leadership Development Conference earlier this year. “You’re managing patients not on a fee-for-service or transactional basis, but managing all the healthcare costs for an entire population of patients. ACO participants are responsible for overall quality, as well as financial consumption. Assuming there are quality outcomes and savings, there is an ability to share in those savings,” says Dr. Skea.

“Fee-for-service is about doing more. ACOs are about keeping people well. It flips the incentive. But the devil is in the details,” says Dr. Skea.

The Centers for Medicare and Medicaid Services (CMS) has implemented the provisions of the 2010 Affordable Care Act with two ACO models: the Shared Savings Program and Pioneer. The basic outline of each, which is contained in a 429-page document, is this: the ACO adheres to a set of 65 clinical measures for managing the illnesses common in this patient population. At the same time, Medicare makes a prediction about how much care will cost in the upcoming year if nothing were to change in the way care is provided. If care ends up costing less than Medicare predicts, the ACO receives a portion of the savings in the form of a bonus. But if the care ends up costing more, the ACO takes a financial hit at the end of the year. Interestingly, under the government model, patients will be retrospectively assigned to an ACO at the end of the year, making it impossible for treating physicians to know which patients will be accounted for in the risk-sharing arrangement, but ensuring that all patients receive the same level of coordinated care.

In the Shared Savings Program, the number of beneficiaries can range from 5,000 to 20,000. Payments are made on a fee-for-service basis, and bonuses are given after at least a 2% savings is demonstrated. Patient assignment in the Shared Savings Program is always retrospective. Organizations don’t need experience with other shared savings programs or performance-based contracts to be eligible. In contrast, the Pioneer program prefers to enroll organizations with experience in shared savings or performance-based contracts. ACO participation is voluntary. Physicians in large groups would likely be enrolled as a group, while members of solo and small-group, single-specialty practices would have to seek out an ACO if they wanted to participate. Physicians could opt out of the plans after three years, but not before.

“In an ACO, you take on the responsibility for the health of the patient through the continuum, and as a physician, you must assure availability of services to keep patients as healthy as possible, as well as treating them when they are ill,” says James Dwyer, DO, executive vice president for physician services at Virtua Health in Marlton, N.J. “Doctors have always wanted to do what’s best for their patients. We’re trying to get to the point where the reimbursement process provides for the care of the patient during times of health as well as during episodes of illness. Coordination improves care and efficiency. We must improve upon the fragmented systems we have now,” he says.

“Most physicians recognize that there’s plenty of waste and areas where resources are utilized inefficiently and, at times, ineffectively. We want to find ways to capitalize on these limited resources to improve efficiency and improve care. This is attractive to clinicians,” continues Dr. Dwyer.

Commercial ACOs

While much of the debate—and some outright hostility—has been directed towards the government plans, some of this attention may be misdirected. Regardless of what happens with the CMS models, the larger question concerns adoption of the ACO model by nongovernmental organizations.

“What is most important for rheumatologists,” says Dr. Hochman, “is what the commercial insurers are doing with ACOs.” Dr. Golbus agrees, and he assumes that the driving force behind ACOs will eventually be the commercial insurance programs. “We should embrace a broader definition, because we know we must improve quality and be more efficient,” to stay in play with commercial ACOs, explains Dr. Golbus. Currently, commercial ACOs are partnering with healthcare systems around the country. For example, Advocate Healthcare in Chicago has partnered with Blue Cross/Blue Shield of Illinois; Catholic Healthcare West is working with the California Public Employees’ Retirement System (CalPERS), Blue Shield, and Hill Physicians; and Norton Healthcare in Louisville, Ky., is partnering with Humana. ACOs can be hospital based or physician based. While much flexibility is possible, most ACOs are built on health systems.

Do Rheumatologists Fit In?

“Rheumatologists must demonstrate their value. How is seeing a rheumatologist cost effective?” asks Dr. Skea. He explains that in an ACO, the primary care physician will act as the quarterback, justifying decisions like referrals to specialists. Using the example of hip replacement in patients with rheumatoid arthritis, he says it’s time for rheumatologists to ask themselves how they can demonstrate that costlier downstream outcomes can be avoided by the management that they can provide up front. These are exactly the questions that ACOs will be asking before contracting with rheumatologists.

Dr. Skea says that to become involved in ACOs and remain valuable members, rheumatologists will need to demonstrate the value of their own services in specific, concrete ways. “The role of rheumatologists is changing. Change is an opportunity. Redefine your role in the planning and coordination of care and adding value. Moving to evidence-based medicine is critical and essential.”

“It’s competitive,” adds Dr. Skea. “Primary-care physicians will be the gatekeepers, so establishing relationships with them is important. A grassroots movement is probably necessary among rheumatologists.” He adds that given the type of medicine that rheumatologists practice, not everyone knows when and how to best use these specialists. “Decision makers need an education on the value they can provide,” he says.

Demonstrating value in concrete, specific terms may be difficult. One goal of ACOs is to standardize medical practice in many areas, reducing variability in practice. But is that realistic?

“There are a number of situations in which variation in performance is due to a lack of precise standards, such as how often a patient with rheumatoid arthritis should be seen in the office and how frequently lab tests should be done. With financial incentives, care would be optimal, but there is also concern that it would be minimal,” says Ron Kaufman, MD, former president of the ACR and chief medical officer of Tenet California.

Dr. Kaufman explains that, ideally, quality metrics developed by specialty medical organizations would help diminish much of the variability in rheumatology practice. “But the reason there is so much variability in rheumatology practice is that the patients exhibit a lot of variability,” he says. “This will be difficult for rheumatologists. And any physician who treats patients with chronic diseases with exacerbations, like diabetes, inflammatory bowel disease, or diabetes, will be in the same boat. The course of these diseases is not steady,” he says.

The difficulties associated with working in one of the cognitive specialties were highlighted in written testimony from the ACR on reforming medicare physician payments, which was submitted to the House Ways and Means Committee in May 2011. Timothy Laing, MD, a rheumatologist and associate professor of medicine at the University of Michigan in Ann Arbor, wrote: “Rheumatologists are uniquely trained to perform intense evaluation and management services to ensure proper diagnosis, determine the best treatment option, and provide expert care. Rheumatology services require lengthy discussions and review of a patient’s history … The current system devalues spending time with patients.”

Dr. Dwyer, who has been co-chair of the National Committee for Quality Health Care (NCQHC) Performance Measurement Tools Task Force since 2004, says that “rheumatologists are very efficient in the way that they care for patients with complex rheumatic disease. To the extent that efficiency is an important part of an ACO, then partnerships between primary-care physicians and rheumatologists is beneficial to both specialties. There are many opportunities for rheumatologists to be involved in the care of their patients and to partner with primary-care physicians to improve efficiency and coordination of care.” One study, for example, revealed that pre-appointment screening by a rheumatologist of patients referred to a rheumatology clinic found that only 60% of patients actually needed to see the specialist, highlighting another way that care by rheumatologists can be cost effective and efficient.²

Advance the Cause: What Rheumatologists Can Do

Depending on the region in which rheumatologists practice, says Dr. Hochman, they need to become familiar with the involvement that their major health systems have with ACOs. Then they have to present their potential value to the healthcare system and the ACO. “Make sure you’re playing a significant role,” he says.

Given that some degree of competition will exist between primary care physicians and rheumatologists in the ACO environment, how can rheumatologists be successful? “The difference is knowledge,” says Dr. Hochman. “In deference to primary-care physicians, they tend to order more tests up front, like CT scans and MRIs, than rheumatologists do. As a group, I think that rheumatologists are more comfortable with a watch-and-wait approach before starting tests. Intuitively, I think they’re more cost effective,” he says.

Some evidence supports Dr. Hochman’s intuition. In a 2000 study that included nearly 5,000 person-years of follow-up in patients with rheumatoid arthritis, care that included specialists was associated with higher quality.³ Several studies have revealed that primary-care physicians overutilize imaging studies, such as MRIs, in patients with acute back pain, and that rheumatologists are more efficient with these modalities. In one study, care delivered to rheumatoid arthritis patients by rheumatologists was not more expensive than care provided by primary-care specialists, largely because more lab testing was performed in primary care.⁴ All of the experts interviewed for this article urge rheumatologists to present data showing that the care they provide is both beneficial to the patient and cost effective.

It’s likely that ACOs will want to bundle payments around musculoskeletal conditions that rheumatologists manage, including back pain and knee or hip replacement. These are particularly important conditions for study in the ACO debate, because they hit both the commercial insurance populations and medicare populations at high rates, and “they’re one of the biggest spends,” according to Dr. Hochman. “How are you going to leverage your expertise in these conditions? Rheumatologists are uniquely positioned to be the manager of how that bundled healthcare dollar should be split,” Dr. Hochman says. He adds that physicians working in healthcare systems like the Cleveland Clinic, for example, may have an advantage because their organizations already understand the value provided by their rheumatologists when it comes to care for patients with back pain and joint replacement.

According to Dr. Hochman, rheumatologists tend to be modest about their skill sets. “It’s part of the personality,” he says. But he emphasizes that this modesty is misplaced in the current debate over involvement and participation in ACOs. “Rheumatologists are experienced in managing complex disorders that cost the system a lot of money,” he says. He adds that they also have a good feel for evaluating outcomes. Ultimately, Dr. Hochman says, two outcomes matter the most among patients in rheumatology practices. First, how many days are patients out of work, and can they get back there faster? Second, what is the patient’s satisfaction with their outcome? “Rheumatologists take care of patients post-total hip and knee surgery and during back pain episodes. They are very familiar with the outcomes, functionality, and satisfaction,” he says.

The current ACO debate is highlighting another characteristic of rheumatologists: They’re not homogenous. Some take a greater interest in inflammatory diseases, while others are more focused on musculoskeletal disorders. Dr. Hochman suggests that general rheumatologists may need to think about the need to hone their abilities in both areas of practice, demonstrating agility and value in the ACO environment. He notes that this may be less of a factor for academic rheumatologists, who are more concerned with grants than reimbursement systems because of the nature of their work.

“At the end of the day, rheumatologists will likely care for the patients they’re trained to care for,” says Dr. Dwyer. He adds that ACOs may force a distinction between rheumatologists who care only for more complex patients and those who provide a considerable amount of primary care. “The distinction will be more noticeable, and some of those rheumatologists on the border may find themselves moving into more of a primary-care role,” he adds.

If any group of rheumatologists is a likely loser here, it is solo practitioners or small, single-specialty practices, says Dr. Hochman, who adds that small group practices are becoming extinct regardless of specialty. In Washington state, for example, only about 15% of physicians work in solo or small group, single-specialty groups. “It’s not sustainable, and I think in five years they will no longer exist,” he says.

Mary Desmond Pinkowish is a medical journalist based in New York.

References

1. HCPlexus and Thomson Reuters. 2011 National Physicians Survey. Available at http://www.hcplexus.com/Survey. Published January 18, 2011. Accessed August 22, 2011.
2. Harrington JT, Walsh MB. Pre-appointment management of new patient referrals in rheumatology: A key strategy for improving health care delivery. Arthritis Rheum. 2001;45:295-300.
3. MacLean CH, Louie R, Leake B, et al. Quality of care for patients with rheumatoid arthritis. JAMA. 2000;284:984-992.
4. Gabriel SE, Wagner JL, Zinsmeister AR, Scott CG, Luthra HS. Is rheumatoid arthritis care more costly when provided by rheumatologists compared with generalists? Arthritis Rheum. 2001;44:1504-1514.