ACOs and My Practice: Are Accountable Care Organizations What the Doctor Ordered?

April 22, 2011
J. Scott Litton, Jr, MD

The final ACO rules are still being revised and the initial registration starts January 1, 2012. At this point, I will cautiously watch the events to transpire over the remaining months in the year and will very likely continue to assume a "wait and see" approach.

The final ACO rules are still being revised and the initial registration starts January 1, 2012. At this point, I will cautiously watch the events to transpire over the remaining months in the year and will very likely continue to assume a "wait and see" approach.

It seems the hot topic around the water cooler for the past several weeks has centered around the new concept of accountable care organizations (ACOs). For those who do not fully understand exactly what an ACO is or what it will do, please join with me because the final rules are to be released by January 1, 2012. Interestingly enough, this is the date that groups may sign up as participants with an ACO.

The ACO concept has spawned off last year's healthcare reform legislation. The goal of an ACO will be to improve the care and outcomes of our patients and simultaneously decrease the costs involved with doing so. The way I understand this concept is to imagine that the amount of dollars available for caring for Mr. John Doe during a certain period of time is represented by a pie. 

The healthcare providers and centers that participate in the care of Mr. Doe during the specified period of time agree to share the pie based upon the work that has been completed. A typical patient with congestive heart failure will see their doctor in the office, in the hospital, the nursing home and may need to receive home health care services. One might then ask the question, how big is the pie? Well, the size of the pie is yet to be determined and the way the knife changes its angle when cutting the pie has yet to be determined, too.

There are some potential benefits to the ACO model. For patients that enjoy good outcomes and do not require frequent office visits, have unnecessary hospitalizations or nursing home stays, the available pie will be largely untouched. In a situation such as this, the physician, hospital, and any other partners in the patient's ACO will be eligible for a small piece of pie as a reward for the good outcome. The proposed incentive mentioned by some analysts would be as high as 60 percent of the expected payments to be received for patient treatment.

Unfortunately, there are proposed downfalls as well. Since the entire healthcare team (doctors, hospitals, nursing home, etc.) are to share the bundled or allowable payment for caring for each patient, there may be a hesitation for some medical practices to accept patients that have complicated medical histories, have a history of multiple hospitalizations, or even patients that are ACO eligible period. Such hesitation to provide coverage might be perceived as some to be rationing of care, however that can be a different topic for discussion on a different day. Other potential consequences might see more physicians decide to opt out of Medicare completely.

As a busy primary care physician, I feel that I am doing a very good job with managing my patients' medical problems. At any one time during the year, my average hospitalization rate is as low as 0.08 to 0.09 percent of my active patients, so why wouldn't I jump at the chance to be rewarded for my patients' excellent outcomes? The final ACO rules are still being revised and the initial registration starts January 1, 2012. At this point, I will cautiously watch the events to transpire over the remaining months in the year and will very likely continue to assume a "wait and see" approach. If the ACO model with CMS proves to be successful (aka saves money for CMS), it will almost inevitably lead to other payors taking the same approach and following the same model. In order for the ACO model to be a success for me it must prove to be helpful for me in delivering care for my patients, it must not place any excessive barriers for caring for my patients, and it must lead to better outcomes.

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