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ACO makes payer an ally of provider

The hottest letters in healthcare right now are A, C and O. And while together they stand for accountable care organization, industry analysts say providers need to look beyond the acronym in their efforts to build a new business model.

Nick Sears, MD, chief medical officer for Atlanta-based MedAssets, understands that there is some confusion and trepidation among provider groups about how to start an ACO. As a veteran observer of industry trends over the past quarter-century, Sears realizes the magnitude of change that is being required of healthcare providers and the daunting task associated with making the necessary modifications.

"At this point, providers shouldn't worry about what an ACO looks like, but instead focus on the building blocks that go into it," Sears said. "Although it is part of the Affordable Care Act, which is currently under scrutiny in Congress, the intent of ACOs will continue even if parts of the ACA are stricken. So providers have to identify their risks in the whole value-based purchasing model because if they don't they are in trouble."

As the new healthcare model has emerged over the past couple of years, Jeremy Belinski, director of operations at MedAssets, has taken to call ACOs by another acronym – CIO, for clinically integrated organization. The description seems more apt for the machinations of putting groups together, he says.

"As we've dug into the process, we've found it is easy to form a legal entity, yet each group has its own model for doing things," Belinski said. "But just because they've joined together doesn't mean they can make it work. Making it operational has been a challenge. They have to get good at managing costs and aligning physicians, which is easier when you're part of an organization. The challenge is to extend beyond the four walls of the hospital."

Managing metrics 

Ken Perez, director of healthcare policy for Emeryville, Calif.-based MedeAnalytics, has been studying the metrics associated with ACO configuration in both the Medicare and commercial insurance domains, developing a comprehensive report and a series of informative videos on the subject. His research found that ACO metrics can be divided into six categories: pediatric, ambulatory, prevention, acute care, outcomes, and utilization of services.

"As more ACOs become multi-payer, it is increasingly important to understand -- for the sake of leverage and organizational alignment -- the general themes and commonly used metrics used in ACO agreements," Perez said. "This strategic understanding will help shape emerging best practices for successful ACOs."

In discerning between commercial and Medicare ACOs, Perez found that commercial organizations place greater emphasis on areas of integration, pronounced cost reduction and resource utilization while Medicare ACOs are focused more on quality outcomes.

"There is a lot of variability between commercial and Medicare ACOs because of different programs and models and you have to choose what game you're going to play," he said. "The end game for the provider has got to be multi-payer, so whether you start with Medicare or commercial, you will have multiple payers, you must leverage costs across the board and implement a standardized level of care."

The 9 C's

"Medical Home" is another moniker associated with the ACO concept and while some see them as interchangeable, Tom Doerr, MD, does not. A general internal medicine practitioner who focuses on geriatric patients, Doerr also serves as director of innovation research for St. Louis-based Lumeris.

The difference between the Medical Home blueprint and a true ACO, he says, is that the Medical Home design does not go far enough in determining how care is delivered.

"There are nine key elements to care called the '9 C's' and the Medical Home only incorporates the first four elements," Doerr said. "We architect how care is delivered at the physician practice level with workflows, metrics and behavioral strategies to convert to value-based delivery. The first four C's are part of the primary care model, but they are not new. An accountable primary care model should include all nine elements."

The 9 C's as Doerr explains them are as follows: Contact with the healthcare system; Comprehensive care; Continuous care that is longitudinally focused; Care coordination; Credibility and trust with the physician; Collaborative learning between payers and providers; Cost effective care; Capacity expansion through technology; and Career satisfaction.

"Beyond the 9 C's, they need to have the collaborative payer model," he said. "The collaborative payer model makes the payer an ally of the provider."

Doerr appreciates the irony in his advocating alliances between two traditional adversaries, but maintains that a cooperative spirit can occur when each side sees mutual benefit.

"The national movement toward ACOs has legs and is gaining traction," he said. "It is blending the role of payer and physician; both quality and cost. While some still aren't comfortable with it, as the movement gains momentum, that resistance will drop."
 

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