April 28, 2014
Making Accountable Care Affordable
Accountable Care Organizations (ACOs) arose from the Affordable Care Act, which was passed into law in March 2010. The Affordable Care Act was designed to redirect the responsibility for healthcare into the hands of individuals, but also to make it more affordable for them. In this blog post, we’ll take…

Accountable Care Organizations (ACOs) arose from the Affordable Care Act, which was passed into law in March 2010. The Affordable Care Act was designed to redirect the responsibility for healthcare into the hands of individuals, but also to make it more affordable for them. In this blog post, we’ll take a closer look at the ACOs, what they mean for patients and physicians and how savings can be optimized.

What Is an Accountable Care Organization?

One way the Affordable Care Act planned to reduce health care costs was to encourage the formation of networks within the Medicare program. The aim of the networks is to curtail unnecessary spending by better coordinating patient care and by sharing financial responsibility by healthcare providers. The primary care physician is the linchpin of a network of doctors and hospitals that provide coordinated care to patients. ACOs may include hospitals, specialists, post-acute providers and private pharmacies.

Each individual ACO are is expected to manage the health care needs for a minimum of 5,000 Medicare beneficiaries.

What is the Range of ACO Coverage?

Healthcare is now delivered to an estimated five million Medicare beneficiaries by an ACO. Furthermore, many non-Medicare covered clients from the private sector have joined ACOs, resulting in an estimated 18.2 million individuals, or nearly 20% of the U.S. population, now receiving healthcare from an ACO.

ACOs From the Patient’s Perspective

Patients are encouraged to use network primary care physicians but allowed to see doctors outside the network without paying more. Primary care providers preferentially refer patients to specialists and hospitals that participate in the ACO network. Participating providers must alert their patients that they have joined an organization, so they can choose another doctor if they don’t care to be part of the network, and a patient may also refuse to share his or her data within the ACO.

Herein lies a crucial difference between ACOs and HMOs; ACO patients are not required to stay within the network and may choose non-member providers with incurring additional costs. Also, the ACO must meet quality standards and ensure that savings are not accomplished by stinting on necessary procedures, tests and specialist referrals.

ACOs Are Touted as More than Medicare Reimbursement Reform

As lawmakers tried reduce the national deficit they targeted Medicare, which is seeing a huge increase in beneficiaries as waves of the population born during the post war Baby Boom are now becoming eligible for retirement. All projections predict soaring rises in the cost of providing healthcare for the elderly and disabled. Projections estimate that ACOs will save Medicare up to $940 million within the next four years, which is less than 1 percent of Medicare expenditure over this time.

ACOs intend to hold providers jointly accountable for the health of their patients. As an incentive, the Affordable Care Act provides for bonuses to be offered to healthcare providers that provide care more efficiently and that save money by only offering tests and procedures that are absolutely necessary. ACOs running in the black while maintaining quality are allowed to keep a percentage of what has been saved.

The Pioneer Program, the brainchild of the Centers for Medicare and Medicaid Services (CMS), was created to allow high-performing health care networks to retain a greater proportion of savings if they would accept greater financial risk.

After about one year, nearly one third of ACOs announced participating in the Pioneer Program wanted to leave. Some ACOs said they didn’t save enough money to validate the risk and some agreed to continue in the program if the risk was reduced.

On the positive side, according to the CMS, 32 ACO participants in the Pioneer Program were successful in improving quality of healthcare, assessed by 15 quality parameters and achieved a gross savings of $87.6 million during 2012.

How Savings Are Realized By ACOs

Traditionally Medicare used a fee-for-service payment system with providers being paid for each test and procedure. This payment system can encourage providers to do more unnecessary procedures, and yield higher costs. ACOs don’t end the fee-for-service policy but instead offer incentives for providers to keep costs down. At the same time, specific quality benchmarks must be met. The focus is on preventing illness; keeping patients healthy and out of the healthcare system should result in savings.

However, when an ACO is unable to save money, it must still bear the costs of providing care and investments to improve or update care. Penalties may also be levied upon an ACO for not meeting performance and savings goals.

Balancing healthcare quality with keeping down costs has not been proven to be an easy task.

Solutions are needed that will provide a way to optimize physician time with patients and at the same time increase the number of patients they can see in a day to realize savings. Most primary care practitioners spend hours each day filling out forms, scheduling patients, and coordinating patient care. Physician assistants can help out but usually have their own patient duties and accompanying paperwork. Another option is a program that trains personnel specifically in the electronic documentation and record keeping requirements of Meaningful Use and the Affordable Care Act. Medical scribes are paid salaries that are affordable by most practices and should be certified by their program as having the necessary training to undertake Medicare and other documentation, thus freeing the doctor to spend more qualiyt time with patients and time to accommodate more patients. Bearing in mind that it is estimated that a primary care physician must see 40 patients per day to generate enough income to maintain a financially viable practice, this volume can simply not be met by a physician weighed down by a morass of paperwork.

How Much Can Medical Scribes Impact Financial Sustainability

A study done by Dr. Alan Bank of the United Heart and Vascular Clinic in St. Paul, Minnesota showed that use of a trained scribe for preparing patients’ charts and documentation prior to visits, increased the number of patients a physician could see per hour by 50%. Scribes enabled the physician to have four patient consultations per hour. The time spent with each patient decreased but this decrease was due to the elimination of data capture and entry by the physician, leaving more patients pleased with the interaction. It was estimated that the direct and indirect revenue was about $2500 for the system per patient, with an outlay of $25 per hour to use a scribe.

Risks of ACO Philosophy

The goal of becoming an ACO that directly employs their providers is driving large hospital networks to buy up physician practices. This has the unexpected effect of turning an independent practitioner who is also an independent business, into an employee of a conglomerate. His or her incentive to provide for patients and build a successful practice is replaced by corporate incentives to meet financial and quality goals. The impact on patient care is yet to be assessed, but healthcare pundits are already beginning to caution that hospital mergers and provider consolidation may culminate in increased purchase of physician practices, leaving fewer independent practitioners and less choice for the individual patient.