Why ACOs Are not HMOs and Other Important Questions

Mohammad Al-Ubaydli: Let’s just start from the beginning. Tom, can you please give us an introduction about yourself and your background?

Thomas Tsang: I’m a general internist by training. I practiced internal medicine in New York City, first at a small community hospital where I predominantly worked with residents and medical students and mostly taught principles of outpatient medicine, ambulatory care and interviewing techniques.

Then I was recruited by the Charles B. Wang Community Health Center. That’s when I got to use some of the public health knowledge that I had acquired: I worked on various public health initiatives for the community in New York City. The health center itself served a predominantly Asian population. It had four sites and one of the things that I did in the beginning was implement an electronic health record. That work led to my involvement with the Board of Health of New York City, which, in turn led to my work in Congress.

I was then selected for the Robert Wood Johnson Foundation/IOM Health Policy Fellowship on the Committee on Ways and Means-Subcommittee on Health and worked on some of the policies that led to the creation of ACO’s, i.e., Value-Based Purchasing, Pay for Performance and so on. I was fortunate enough to actually help implement some of the policies that I worked on! It’s a long answer to your question, but that’s the route I took.

Mohammad: It’s perfect. It’s really interesting to learn. Among the many things under your belt, it sounds like you have a successful electronic health record deployment, which is good–so well done! Tell me and our readers a bit about Accountable Care Organizations. What is an ACO and what is the point of it?

Thomas: The ACO is not a very new concept. It was a term that was coined by Elliott Fisher from Dartmouth Medical School, who is the director of Center for Health Policy and Clinical Practice. I hate to use the word HMO, but in a way, it’s almost like an HMO. It’s not really an HMO because it is actually a provider-led organization, not an insurance-led one.

In an ACO, the participants agree to be accountable for a population of patients and have agreed to share, not just in terms care delivery, but also in terms of risk sharing: cost and utilization of services. The ACO attempts to increase access, promote higher quality, and reduce costs. And one hopes because of the organization’s direct responsibility its population of care, that it would achieve success in all three of those domains.

Mohammad: Let’s cover this from a different perspective. If you are a patient, how do you hear about the existence of an ACO and how do you take part in the benefits of an ACO?

Thomas: I think the patients would probably not see the word ‘ACO’ attached to the organization. They would probably experience it in a number of contexts. Perhaps, let’s say you’re an employee working for a large employer and you’re getting your health benefits. You may see a strong affiliation of a plan with a large network of providers and that strong partnership may provide, let’s say, lower co-pays as opposed to a fee for service model that may involve higher co-pays.

That’s perhaps one context in which we can see an ACO represented in the private market. In another context, in the Medicare population, you may notice that the services that you receive–all of a sudden–have been enhanced. There may be patient navigators in place or you might see educational materials. Perhaps the patient portal that you’re going through in order to receive your medical records or your patient health information is branded differently.

I don’t think you’re going to see heavy marketing materials, but I think in the context of Medicare, some of the marketing materials have to be very patient-focused and patient-centered and make it easily understood that the patient is part of some enhanced service.

Mohammad: It sounds like there’d be some signaling to the patients that they’re getting better service, and hopefully they’ll also be able to get lower costs. Most importantly, as a difference from HMOs, it’s not that they see it as a restriction of choice. It’s actually that they get a wide network of providers to choose from. It sounds like they will get the best of both worlds.

Thomas: Yes. I think one of the key differences here is that HMOs have been putting up walls in terms of patient options, whereas ACOs are breaking down those walls. One of the major tenets of the Medicare program and the Medicare pilot is that the patient would not be forced to choose networks of doctors. They are supposed to have a choice.

Mohammad: If you are a provider who is being approached by an ACO to be available to its members, what’s that experience for you such that you’re able to deliver high care, but still–given your affiliation with the ACO–you’re able to do so at lower costs? What is it that affiliating with an ACO can deliver that wasn’t delivered before?

Thomas: I’m speaking directly about the Medicare Pilot and the primary ACO Program associated with CMS. I don’t have a good sense of what’s happening with the commercial and private sector ACOs that are setting up, but at least with the CMS program, specialists have the option of joining more than one ACO. It’s really the primary care doctors that have to make a decision and join one ACO.

I think what you get out of it as a provider is the back-end operational, administrative and informational linkages that you normally don’t get as a solo practitioner–as a single walled-off private practice. I think we’re witnessing a phenomenon where to a large degree, out of the 600,000 Medicare providers in the past, especially in the past five to 10 years, 70% of these providers have been in practices of 10 or fewer.

We’re seeing a major shift where many of these providers now are being gobbled up by large hospital networks–a tremendous amount of vertical integration across the ecosystem. I think it’s going to be extremely hard to be practicing medicine in the forthcoming years where you’re disconnected from your peers and from acute care hospitals or the post-acute care organizations, such as nursing homes or rehabilitation facilities.

What the ACO provides is really that connectedness factor. Whether it’s going to be operational; whether it’s going to be the business operations; or whether it’s going to be the informational continuity required in order to provide care for your patients.

Mohammad: Let me explore this side because a big part of the expense, inefficiency and danger in health care stems from not having the right information about the patient across all their care settings, wherever the patient may be. The approach you’re describing–of vertical integration–if the hospital starts buying up different care settings and following the patients through those, and everyone in this large organization uses the same electronic health record system–then maybe that would be how you maintain the data moving back and forth.

With an ACO, it’s actually making a different promise, which is you will have the information continuity, but not because you’re vertically integrated. It’s because of the back-office operations that the ACO can offer its affiliated physicians. Did I understand that right?

Thomas: Yes. It offers an alternative to vertical integration.

Mohammad: How are they able to get this data from all those different providers?

Thomas: I think you have to look at the entire ecosystem. Before the Affordable Care Act, the stimulus package appropriated $28 billion for the development of a health IT infrastructure.

There was the idea of–and it’s actually happening as we speak–creating standards and interoperability infrastructure to allow health information to flow from one provider to the next provider, as well as to the patient. For the first time, we’re seeing some significant progress in capturing important information in a structured format. Parallel to that, we have information exchanges that are being set up by both quasi-government entities, and the private sector to allow for this exchange of information.

I think we are really seeing the convergence of the health IT arena and the ACOs, which is much more of a payment and delivery system reform effort. The confluence of these multiple trends is having an impact.

Mohammad: If you’re a physician, you would at some point in the past or the next few years have received an electronic medical record system that, due to the HITECH Act, has the hooks to allow integration and data transfer according to interoperability standards. Then the ACO can say, “In exchange for affiliation, we want to make use of those hooks so that data can flow between you and the other providers.” So in exchange for the financial reimbursement for looking after ACO members, you have to sign up to expose those hooks, so the data can flow across the providers.

Thomas: That’s correct.

Mohammad: If I’m a patient–say, I’m a member of ACO–and I see you as my family physician, and I see someone else as my ophthalmologist, for example. How do you know that you can transfer my medical records to the ophthalmologist on my behalf?

Thomas: Well, I’m making an assumption here that when the ACO is legally formed, the board contains representation from patient groups or from the population that they will serve. I’m assuming there will be rules and regulations and policies regarding the consent of patients in exchanging information explicitly on the ACO information highway.

Right now we do it all the time, under HIPAA. We’re allowed to exchange information along with a multitude of other providers on the same team as long as it’s in the context of caring for the patient. There are some state rules; there are some differences in terms, at the state level, regarding sensitive information. For the most part, in the case of this new era of the ACO, I think there will be a consenting process in the network.

Mohammad: This is what I’m wondering. You mentioned earlier that one of the ways that patients may experience an ACO is that the ACO has a patient portal through which they could look at their records. How are people doing these patient portals and is that part of the solution to the consenting process?

Thomas: I honestly have a feeling that most places are consenting through paper. I think there are some places that are consenting with electronic signatures.

Mohammad: I remember the first time I went back to the USA; that a lot of the places that I thought were transferring data electronically–what they actually meant by electronic data transfer is that they use a fax machine.

I was curious if the ACOs would start saying that actually the easiest way for the data to flow across the providers is for the data to flow from each provider into the patient’s account. Then it flows from there to the ones who need it; or whether they were actually building their own portals.

Thomas: I think there are roughly about 200+ ACOs across the country right now. CMS is expecting more next year. It’s going to be all the above. There are certain marketplaces like in Indiana where exchange is something that’s working out. They have a number of private exchanges, and they have a well-operationalized model where they have data agreements with each other and have worked out policies with patients as opposed to other markets where people are just starting to implement and adopt the policies to exchange information electronically. I think it really varies from market to market.

You can’t achieve quality without sharing information. The participants are forced to work together when you have primary care providers working on, let’s say the ambulatory care side of congestive heart failure management, and then you have the hospitals being responsible for the acute care of congestive heart failure patients. At the same time you have different multitudes of quality thresholds that are evaluating the performance of the care that you’re delivering. That really forces the participants to work for sake of the patients, as well as to hit these quality thresholds, which, in turn, will affect how they will be judged by the purchaser and by the payor.

Mohammad: Tell me more about this. From a physician’s perspective, the data of what you are doing with the patient is floating up the ACO. Then based on that, it’s determining your compensation. Is that right?

Thomas: Yes, that’s correct; but only part of your compensation. Not all of it because it’s still a hybrid of fee-for-service plus bonus structure. Part of your compensation will hinge upon the fulfillment of these quality measures. ACOs have 33 quality measures to fulfill. They range from preventive care, to diabetes care, to cardiovascular care, to screenings and to patient satisfaction surveys. There’s a wide range and a wide spectrum of different types of clinical measures that require the data from across health systems and across the continuum of care.

Mohammad: So ACOs will have their care geared towards more chronic illness. But what about less common illness, such as Cystic Fibrosis?

Thomas: Yes, the measures themselves are targeted towards chronic disease. Cystic fibrosis is just as equally important as diabetes and congestive heart care. I can’t speak for CMS, but when you’re talking about the top five costers for CMS, they have to pick out these highest and focus. You can’t focus on everything, or else you’re never going to get anything done, right?

The measures themselves are going to probably change quite a bit. They’ll focus on measures that really matter to patients and ask, “did the care that the patient received actually increase his or her quality of life? Those outcome based measures are what we’re shooting for, and I think that’s going to be better defined as we receive information directly from patients.

Mohammad: Where do these definitions come from?

Thomas: When we’re talking about the ACOs that are coming out of CMS, then CMS is acting as the purchaser, and they will define it. If you’re talking about ACOs that are paid for by employers or by the commercial private sector, then, I think, the measure will be defined by whoever’s paying or initiating these them, which will be the employers or the state.

Mohammad: So it’s not like they would copy some of the existing measures from somewhere else. Each of them may independently, as a payor, make their own decisions on what they’re going to do?

Thomas: Yes, that’s right, but I think the selection of these measures will be decided by the payers and purchasers and perhaps other input. Whenever CMS chooses these measures, there’s a lot of public consensus and there’s a lot of input from multiple stakeholders. It’s not a unilateral decision made by CMS. There’s a very strong and transparent process for how these measures are selected and there’s constant feedback from the public. The public includes many voices.

Mohammad: In the UK, when the government was focusing on a hypertension program, a diabetes program and so on, in isolation, the cost savings were not coming through or certainly not as much as everyone had wanted them to come through. That people began saying, “Actually, well the real problem is you’re not looking at the patient holistically, who may have combination of diabetes and hypertension, you’re just looking at the individual cost centers, which leads you to innovate in silos.”

You mentioned for example, the ACOs will end up having patient navigators. I’m just wondering whether those are the kinds of people that will be looking at the patient’s problem holistically, rather than any individual program.

Thomas: I think so. There’s a program that’s received a lot of attention in North Carolina, headed by Allen Dobson. It’s a patient-centered program that employs patient navigators and care managers at the ground level. The amount of navigation and care corresponds to the amount of need.

I think at least against the CMS–I think we have 70% of the costs attributed to perhaps 20% of the patients and beneficiaries. Again, for simplicity, let’s just use the 80/20 rule. I think it makes rational sense that we would focus on 20% of these patients.

If you’re talking about cost, then yes, I think we would be focusing on patients with chronic diseases and you would need a much more holistic approach and not a siloed one. You’re not going to have a diabetes navigator and then a congestive heart failure manager and a mental health one.

Mohammad: I fully agree. Well, it looks like that’s all we have time for (and we covered quite a bit of ground!). Thanks again for your time and insights.

Dr. Mohammad Al-Ubaydli is the founder and CEO of Patients Know Best (patientsknowbest.com). Dr. Thomas Tsang is the former Medical Director, Meaningful Use and Quality at the Office of the National Coordinator for Health Information Technology.

21 replies »

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  2. Google “Wake Med” to find out what’s going on in NC. The federal judge says he’s tired of these thieves getting slaps on the wrist.

  3. I’ve read it. I’m talking about (as I said) the language of those who think ACOs will succeed, not the actual text in the bill. Trouble yourself to actually READ my post.

  4. Hospitals are commonly involved with fraud, as reported on several blogs. And now, they are going to become accountable? Really now!

  5. The entire language of the ACO initiative is propositional and tentative. Unlike the summary judgments of those carping from the sidelines. Trouble yourself to actually READ those sections of PPACA.

  6. Is predicting that ACOs will not accomplish what is predicted for them any more banal, judgmental and premature than what we get from those who think they will succeed? It’s a very expensive experiment and nobody has any idea what the results will be.

  7. ACO is just another construct by those on the take in conjunction with the un-informed politicians to give the illusion that they are doing something to improve the delivery of medical care. There is nothing accountable about them at all, and the care will be as bad if not worse as when it was dictated by HMOs. They may as well be called, Doctor Subversion Organizations.

  8. Without sufficient incentives to change practice patterns, I’m quite concerned that we’ll end up without much change to the health care system. This is a long term process which could easily be derailed by any number of issues including physician leadership, financial considerations or lack of willingness to change.

  9. “Without the data, ACOs are “flying blind” – not really knowing what these members need and which members should have care coordination services.”

    Are we saying that doctors have no clue what their patients need until Medicare tells them what they need? Maybe they should pick up the phone and find out. I presume they know what their patients’ phone numbers are….

  10. For Medicare MSSP ACOs (http://go.cms.gov/VoRKaR), the program is designed so that the ACO providers share in the savings that they generate from improved coordinated care of the attributed ACO members. This is the incentive for ACO providers to participate and is a step towards having providers actually assume more risk in managing these fee-for-service (FFS) patients. This model is essentially the FFS Original Medicare program with provider-organized care coordination services applied on top of it. A good idea – in theory.

    One of the main problems with the Medicare ACO program is that the shared savings is calculated retrospectively (a year or two after the program starts) so the ACO doesn’t get any bonus money until they actually show some savings, but the costs of running the needed care coordination program, of course starts on day 1 – and also the ACO must have a technology infrastructure to meet the quality reporting requirements, which is also expensive.

    Another issue is that this is an upside only program (for the most part), and so the ACO providers don’t really have anything to lose, except maybe the start-up costs, if they fail to show any savings. This means that even though the providers are participating in an ACO, they can still continue to operate in the same manner, if they truly don’t believe any savings will be generated, without any loss of revenue (income). And there is a lot of skepticism in the provider community that any savings will actually materialize, so while the potential to save money is there, there are mixed feelings and probably less than full efforts made to actually do so.

    Just because ACOs have providers with electronic health records (EHRs), does not necessarily mean that the different EHRs within a community of providers are interoperable (e.g., able to exchange and share patient data). This problem will become more evident as more and more providers get onto EHRs. Clinical data liquidity is a real problem and will continue to be a problem in the near term. This will handicap ACOs in creating a truly virtually integrated delivery system, datawise.

    And finally, the success of a Medicare ACO will be due in large part to the ability of the ACO to manage the clinical data of the attributed members. But, CMS isn’t providing this clinical data to the ACOs in a timely fashion. For example, for the new crop of Medicare ACOs that just started this January, the data for the attributed members won’t reach the ACOs until sometime in April. Without the data, ACOs are “flying blind” – not really knowing what these members need and which members should have care coordination services.

    For commercial (non-Medicare) ACOs, they have more flexibility and some commercial ACOs have already demonstrated significant savings, which has spurred on the commercial plans to create more ACO-like contracts. In the commercial world, the ACO model (or alternative payment schemes) are simply a way for providers to take on more risk and potentially take home more pay.

    But the ACO model is not just a financial model. In order for ACOs to be successful, they must also fundamentally change the way they approach the healthcare services delivery model. They need to become truly patient-centered, focused on quality, efficiency and delivering on value. Hopefully, providers will be able to make this leap. I am cautiously optimistic.

  11. ACO’s are managed care without the risk. That’s like vegan BBQ.
    The risk is precisely what forces you to make choices. This is a REALLY stupid idea.

  12. Are you (or Kleinke) claiming that ACOs are not about managing the money?

  13. “it’s still a hybrid of fee-for-service plus bonus structure. Part of your compensation will hinge upon the fulfillment of these quality measures. ACOs have 33 quality measures to fulfill. They range from preventive care, to diabetes care, to cardiovascular care, to screenings and to patient satisfaction surveys. There’s a wide range and a wide spectrum of different types of clinical measures that require the data from across health systems and across the continuum of care.”

    Gotta tie CQMs to outcomes, or it’ll just be more of the same hated scut work.

  14. Quoting Dr. Jordan Shlain (who might have been quoting someone else)

    “An ACO is an HMO 2.0 + Data”