Saturday, February 25, 2012

Accountable Care Organizations: Par for the Course

Betty Jo was one of my favorite patients as a medical student. This 71 year old widow, with an obsessive zest for golf, was also one of my best teachers. It took this affable elderly woman to demonstrate the United States health system’s fragmentation before I truly understood the magnitude of the problem. She was a motivated patient who was lost in the shuffle between doctor visits. Miscommunication was the norm between my preceptor and Betty Jo’s other providers. She had 20 medications scribbled on an old piece of yellow legal paper, but nobody knew what she was actually taking, not even Betty Jo. I was embarrassed by her care which resulted in poor outcomes, deteriorating health, and multiple hospitalizations.

Like Betty Jo, over half of Medicare beneficiaries have five or more chronic diseases1. Chronic illnesses require new and innovative ways to deliver care. A 10 minute appointment slot that culminates with a blood draw and limited free samples of necessary life-saving medications represents a failure of our pre-ACA system. Running from one doctor’s appointment to the next, getting each of her diseases treated individually is proving ineffective. The quality of care is poor, costs are exponentially rising, treatment regimens are uncoordinated, medical tests are redundant, hospitalizations and emergency room visits are frequent, and the patients are unhealthy and unsatisfied with their care.

For Betty Jo and the other 47 million Medicare enrollees, Title III of the Affordable Care Act (ACA) hopes to provide an answer2. Title III establishes a shared savings program with organizations, known as Accountable Care Organizations (ACO), which will take responsibility for all aspects of Medicare patients’ care, including quality and cost. ACOs will bring together groups of doctors, other providers, and hospitals under one network3. ACOs that agree to manage all the health needs of at least 5,000 beneficiaries for no less than three years will roll out this spring 4.

The most exciting aspect of an ACO is that it will create an environment conducive to clinical innovations. ACOs will liberate providers from the chains of fee-for-service, and pay them in ways that promotes creativity and innovation in care delivery. Practices will finally step outside antiquated delivery models and start utilizing group visits, team based care, longer patient visits, and technology to maximally enhance patients’ health. Specifically, in a world where non-communicable diseases are the most salient health problem, this new model of care will integrate all components of the care delivery chain, improving health outcomes, and keeping patients, like Betty Jo, out of the hospital and on the golf course.

ACOs show promise and are being touted by some as the solution that will revolutionize health care delivery across the U.S., but I see three challenges ACOs must overcome to achieve effects of that magnitude: (1) primary care physician (PCP) shortage, (2) inaccuracy and inexperience assessing quality, and (3) inability to reach rural and other underserved populations.

The PCP shortage creates a barrier for successful implementation of ACOs. At the center of the ACO model are PCPs who are essential for providing access into the network, and then coordinating and integrating care with others in the medical neighborhood. Specialist providers are good at treating illness once the patient is already sick, but the goal of an ACO is to keep patients healthy and to reduce both specialty care and hospitalizations4. PCPs are specifically trained to provide comprehensive care focused on keeping the patient healthy. When prevention, health maintenance, and routine care fall short, they are experts at connecting patients with appropriate specialty care when needed. ACOs will ask more of PCPs, but with too few providers available, it will limit the capacity of ACOs5.

The second major challenge moving forward will be to determine what quality indicators are important and how these metrics are measured. As payment and shared savings are tied into quality control, it will be critical to ensure that the metrics accurately reflect the care being provided. A recent report from the Inspector General discusses how quality measures from electronic databases are often too blunt and are unable to provide useful information on targeted outcomes6. Quality measures must be able to tease out the direct effects that providers have on patient outcomes, but the science of measuring this will take time to fully mature. Lastly, many practices have limited or no previous experience with monitoring quality data7. For these practices, operating under new quality and cost incentives will feel like making their way in the dark.

The last major impediment to successful implementation is that ACO models will be difficult to adopt in rural health clinics (RHCs) and Federal Qualified Health Centers (FQHCs). One out of five Medicare recipients lives in a rural area and in 12 states over 50% of the Medicare population is rural8. RHCs will not have sufficient startup capital or enough patients to justify bearing financial risk for their care. Even with the subsidies and tiered risk-bearing which was negotiated last October, it is feared that the financial incentives will not be enough unless the total potential savings is increased7. FQHCs serve 1.4 million Medicare beneficiaries and face a similar situation. It will require extra incentives for them to take responsibility for the outcomes of this inherently high risk population9.

Despite these challenges, ACOs show promise for delivering better health care to patients like Betty Jo. Betty Jo’s primary care provider will finally have the time and tools he needs to coordinate and integrate care effectively and ultimately keep her healthy and out of the hospital. This will encourage clinical innovations that are patient-centered, more efficient, and higher quality; all this will cost Betty Jo, as well as the overall health system, less10. Private insurers have already shown interest in negotiating ACO-like contracts, so non-Medicare patients will benefit as well11. For Betty Jo, her future looks bright and her new biggest concern will the bogey she just got on the 18th hole.


1. Accountable Care Organizations: Improving Care Coordination for People with Medicare,; November 16, 2011

2. State Health Facts, “Total Number of Medicare Beneficiaries 2011,” Kaiser Family Foundation; February 2012

3. McDonough, J., Inside National Health Reform; University of California Press; New York 2011

4. Gold, J., “ACO is the hottest three letter word in health care,” Kaiser Health News; October 21, 2011

5. Centers for Medicare and Medicaid Services website;, accessed February 19, 2012

6. Levinson, D., “Adverse Events in Hospitals: Methods for Identifying Events,” Department of Health and Human Services; March 2010

7. Berwick, D., “Making Good on ACO’s Promise: The Final Rule for the Medicare’s Shared Savings Program,” The New England Journal of Medicine, 365:19; November 10, 2011

8. Kaiser Family Foundation, “Percent of Medicare Beneficiaries Residing in Rural Counties, by State, 2010,” February 2012

9. MedPac, “Federally Qualified Health Centers,” MedPac Report to Congress; June 2011

10. Merlis, M., “Accountable Care Organizations,” Health Affairs; July 27, 2010

11. Fisher, E., McClellan, M., and Safran, D., “Building the Path to Accountable Care,” New England Journal of Medicine; 365: 26, December 29, 2011

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