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ACOs: Risk or Reward?

June 24, 2011
by Mark Hagland
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Industry experts and healthcare IT leaders agree that the recently released proposed rule on the creation of accountable care organizations (ACOs) is offering a heady mix of opportunity and risk, and that laying the IT foundation for success under ACO initiatives will be massively challenging for the vast majority of patient care organizations nationwide. Those a bit further along on the journey say that interoperability, connectivity, and the leveraging of clinical IT for intensive care management and data analysis will be essential to ACO success.

On March 31, when the federal Centers for Medicare and Medicaid Services (CMS) released its proposed rule for accountable care organization (ACO) development under federal healthcare reform, it unleashed a torrent of comment, interest, and concern across the healthcare industry. In releasing the proposed rule, CMS both fulfilled an explicit requirement under the Accountable Care Act (ACA), the federal healthcare reform legislation passed in March 2010, and also signaled to the industry its intentions around one major element of reimbursement reform.

YOU'VE GOT TO BE ABLE TO GET INTO YOUR ELECTRONIC HEALTH RECORD AND CREATE DISEASE REGISTRIES, HELP [Patients] MANAGE THEIR DISEASES, BE ABLE TO INTERVENE TO PREVENT EMERGENCY DEPARTMENT VISITS.-DONALD W. FISHER, PH.D.

Indeed, taken together with new mandates around value-based purchasing, readmissions reduction, and non-payment for healthcare-acquired infections and conditions and “never” events, the creation of the voluntary ACOs program points towards a healthcare reimbursement system moving rapidly away from no-strings fee-for-service payment for hospital and other services, and towards a system strongly modified in favor of various contingencies around payment.

And while many provider leaders are interested in becoming involved in the Medicare shared savings program around ACOs-and in many cases, shared-savings programs in the commercial health insurance market, as well-many expressed some alarm, following the March 31 proposed rule release, at some of the elements in the proposed rule. These include elements around payment itself (most especially the downside risk elements in the “two-sided risk” model being offered alongside a “one-sided risk” model) and in the level of information technology and data management challenges involved.

For example, under the proposed rule, 50 percent of physicians participating in any ACO would have to be “meaningful users,” as defined by the Health Information Technology for Economic and Clinical Health (HITECH) Act, a requirement that many provider executives consider unrealistic in the short term. What's more, the interoperability and connectivity requirements appear daunting to many in patient care organizations.

MORE THAN SIMPLE EHR IMPLEMENTATION

All aspects of ACO development will prove challenging if the specific requirements of the proposed rule remain in place in later stages, says Donald W. Fisher, Ph.D., president and CEO of the Alexandria, Va.-based American Medical Group Association (AMGA). In terms of the level of nationwide physician group preparation for ACO development, Fisher says, “I think it runs the gamut; the very small solo practices and smallest groups are simply not ready. But some of the larger multidisciplinary medical groups that have a significant enough primary care base and relationships with hospitals, and that have some level of electronic health record, and some experience with population health management, and are looking beyond one-patient-at-a-time episodic care, are more ready.” That being said, he emphasizes that “As far as the electronic health record, it's not just having an EHR that stores patient information isn't sufficient,” Fisher notes; “you've got to be able to get into your electronic health record and create disease registries, help [patients] manage their diseases, be able to intervene to prevent emergency department visits, and so on.”

Key Elements of the ACOs Proposed Rule

Key elements of the 429-page proposed rule on accountable care organizations released on March 31 by the federal Centers for Medicare and Medicaid Services (CMS) include the following:

  • The creation of two different risk models: “one-sided” and “two-sided,” in which provider collaboratives forming ACOs can either go solely for potential payment bonuses under the ACO shared savings program under Medicare, or can accept downside risk as well, for a higher potential reward.

  • Among the requirements in the proposed rule is one that states that at least 50 percent of physicians participating in an ACO must be “meaningful users” according to the HITECH Act's definition of meaningful use.

  • CMS officials indicated in the proposed rule that they expect between 75 and 150 ACOs to emerge during the initial phase of ACO development.

Jacqueline Dailey

Jacqueline Dailey

 

Keith Figlioli

Keith Figlioli

 

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