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Getting the Big Picture on ACOs

August 24, 2010
by Mark Hagland
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Web-Exclusive Interview: Chet  Speed, Vice President, Public Policy, American Medical Group Association

One significant element in the comprehensive federal healthcare reform legislation passed by Congress and signed by President Obama in March (the Patient Protection and Affordable Care Act) was the inclusion of legislative language to support the development of accountable care organizations (ACOs) under the Medicare program. Physicians, physician groups, hospitals, and other patient care organizations will soon be given the opportunity to create collaborative organizations that will be able to accept unified payments for patient care that spans the spectrum of care. One organization that was deeply involved in initial proposals to Congress around ACOs during the months in which the healthcare reform legislation was being developed in Congress was the Alexandria, Va.-based American Medical Group Association (AMGA), whose 370 member organizations, which are larger physician groups and integrated systems, represent 109,000 practicing physicians nationwide.

AMGA’s vice president, public policy, Chet Speed, spoke with HCI Editor-in-Chief Mark Hagland recently regarding ACO development under healthcare reform, and the implications for CIOs and other IT leaders, as well as for executive and clinician leaders in patient care organizations more generally.

To learn more about AMGA’s ACO resources.

Healthcare Informatics: Where is your membership on ACOs right now, and what are you looking to accomplish?

Chet Speed: A little background. The ACO statute was largely based on a demonstration that CMS [the federal Centers for Medicare and Medicaid Services] called the Physician Group Practice (PGP) Demonstration. That demo included ten sites, including standalone groups, hospitals, MSOs [medical service organizations], etc.; and nine of those sites were AMGA members. And it focused on quality improvements, and on cost savings to the Medicare program. And the AMGA members were able to hit all the quality metrics and to provide multi-million dollars in savings to Medicare. So we had some of our members discuss their experiences with key Capitol Hill staff. And once the Hill staffers heard about those successes, they asked AMGA to draft a legislative proposal; and we provided a draft in January 2009; and it’s safe to say that that became a basis of the statute that came out. Obviously, Hill staff refined it, and CMS revised it. But AMGA was there at the beginning.

HCI: What kinds of things became very apparent in that demonstration project, and what were the key learnings?

Speed: Two things. One is, intense care management processes that involved really monitoring chronically ill populations and that provided critical interventions in a timely manner, led to success. And also, there is a significant IT component to care coordination or care management. And one of the things we learned during the demo and also through our membership, is that you obviously need an EMR; but the EMR can’t just be used as a record, but rather, must also be used as a data collection and analytical tool. Obviously, mechanically, to participate in an ACO, you need to report on measures. But the analytical part is clearly key to determining what’s going on with your population, and to improving their conditions. Obviously, you can find out that there are 30 primary care physicians in your group practice and 25 have patients with hemoglobin A1c levels that are 7 percent or below, and thus, they’re controlling their diabetes; but if you have an outlier patient of 9.5 or 10 percent, you can use analytics to find out why. And a key component of this is to find out why, and perhaps prescribe the medication earlier; or perhaps one physician is getting all the challenging patients because he or she is the best. And that allows you to reengineer your care processes to better treat the patients.

HCI: Was there a range of degree of success in the demo?

Speed: There was very little range in terms of quality improvement; all the PGP folks hit all their quality metrics, which is very impressive. And they did that through tightly managing their patient populations, and using their EMRs to facilitate that work. There were, however, uneven results on the cost savings side. Only five of the ten groups received shared savings over the five-year demonstration program. There was a requirement by CMS to achieve 2 percent savings before they could share in the savings. They all achieved the 2 percent savings threshold.

HCI: What will be happening next in terms of ACO development under healthcare reform?

Speed: The statute, like all laws, is very broad; so CMS is in the process of developing the regulatory framework right now. They need to do it in a fairly timely way, because the ACO program is scheduled to go live on January 1, 2012. So CMS has to come out with a proposal and allow for potential ACOs to come in; and they have to come out with a final rule to allow potential ACOs to determine whether they’re interested or not.

HCI: What are you hearing from your membership with regard to their level of interest?

Speed: Some of our members are very, very enthusiastic about ACOs, because they feel the ACO program will allow the group practice model to demonstrate its ability to improve quality and cost-effectiveness. We have 370 members, and all are at least very aware of ACOs, and are interested. We’ve had seven regional meetings on ACOs over the past several months, and have had over 600 attendees, which is two to three times the average. And we’re having a national conference September 29 to October 1 in Hollywood, Florida, and already twice as many attendees have registered as we might have anticipated; so interest is very high. And AMGA will have two collaboratives—a development collaborative and an implementation collaborative. And we’ve had two webinars discussing what we might do. And we had 150 groups that participated in those webinars. So I think there really is interest in this.

HCI: What’s your sense of what the interaction will be like between hospital leaders and medical group leaders?

Speed: There will be interaction; the ACO law requires coordination between Medicare Parts A and B; so there will be a hospital component and a medical group component. And standalone groups, which average around 150 doctors in size, will need to reach out to hospitals around ACOs. We believe ACOs need to be physician-led, because the care coordination that’s necessary to improve care quality will almost wholly be on the ambulatory side, on the shoulders of the doctors, the nurses, even dietary. So the intense service use will be on the Part B side. That’s why we think it will be physician-led. Now obviously, hospitals will have to be involved. I think hospital leaders are looking at ACOs with great interest also, because if the care coordination is on the physician side, the cost savings is probably focused most on the hospital side, through reducing admissions and reducing ED visits. So a lot of the hospital leaders are interested as well.

HCI: Do you think everyone will get along and ‘play well together’ here?

Speed: That depends. Some groups have relationships with hospitals, and will be able to partner. In the more traditional situation where you have a hospital and 100 or 200 physicians who aren’t in a group, and who just admit to the hospital, that will be a little more difficult when there aren’t large practices involved, because the hospital and those community docs don’t always see eye to eye.

HCI: Do you have any sense of the preparedness for this among IT directors and CIOs in your member groups?

Speed: Most of our members have IT departments; and AMGA actually has a CIO council. My impression is that, certainly, when you think of our members at the very integrated level like Mayo, Cleveland, Kaiser, and Ochsner, their IT departments are large and sophisticated, and are already integrated with the hospitals, so that shouldn’t be an issue. Now even our standalone groups have IT departments. And at least 80 percent of our members had an EMR or were installing an EMR about two years ago.

HCI: What do you see in terms of the trajectory of involvement in the program, over the next few years?

Speed: It feels fast-track right now; there’s interest among our members, there’s interest in the payer community. Obviously, when the regulations come out from CMS, that’s when people will take a hard look at this.

HCI: When will the preliminary regulations come out?

Speed: I’ve heard anywhere from September to December. And obviously, the faster the better, because there are hard issues that CMS has to weigh in on, that will affect interest in participation. But there are dozens and dozens of our members that are interested; and I think the commercial payers are looking at ACOs with great interest also. They tend to follow what Medicare does. But they may be interested in doing some pilots themselves in the next 18 to 24 months, even before the ACO program is up and running, because there is a focus on reducing hospital admissions and improving quality, and that should be attractive to the commercial payers.


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