Do ACOs provide more questions than answers?

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Although the Centers for Medicare & Medicaid Services (CMS) has not yet released the formal regulations on what an ACO should entail, the American Medical Association (AMA) has released principles that may help guide the transition into ACOs.

“The AMA’s new principles emphasize that ACOs "must be physician-led, place patients' interest first, ensure voluntary physician and patient participation, and enable independent physicians to participate,” AMA stated.

Although medical decisions should be made by physicians qualified by training and education, the ACO should also be governed in part by a board of directors elected by ACO professionals, the AMA stated.

In addition, the association noted that in cases where a hospital is involved in the ACO, the governing board of the ACO should be separate and independent from the hospital governing board.

In addition to ACO governance, AMA also offered some of the following principles for ACOs:

  • Physician and patient participation in an ACO should be voluntary. Patient participation in an ACO should be voluntary rather than a mandatory assignment to an ACO by Medicare;
  • The savings and revenues of an ACO should be retained for patient care services and distributed to the ACO participants;
  • The ACO spending benchmark should be adjusted for differences in geographic practice costs and risk adjusted for individual patient risk factors;
  • The quality performance standards required to be established by the Secretary must be consistent with AMA policy regarding quality;
  • An ACO must be afforded procedural due process with respect to the Secretary’s discretion to terminate an agreement with an ACO for failure to meet the quality performance standards.
  • ACOs should be allowed to use different payment models. While the ACO shared-savings program is limited to the traditional Medicare fee-for-service reimbursement methodology, the Secretary has discretion to establish ACO demonstration projects;
  • The Consumer Assessment Of Healthcare Providers And Systems (CAHPS) Patient Satisfaction Survey should be used as a tool to determine patient satisfaction and whether an ACO meets the patient-centeredness criteria required by the ACO law;
  • Interoperable health IT and EHR systems are key to the success of ACOs;  and
  • If an ACO bears risk like a risk bearing organization, the ACO must abide by the financial solvency standards pertaining to risk-bearing organizations.

Another view
However, physician-controlled ACOs will not be the only option, according to a perspective published in the Nov. 11 issue of the New England Journal of Medicine.

In that publication, authors Robert Kocher, MD, and Nikhil R. Sahni, BS, of the McKinsey Center for U.S. Health System Reform and the Engleberg Center for Health Care Reform, Brookings Institution in Washington, DC and Harvard Business School in Boston, offered that there will be the possibility of hospital-controlled ACOs, which will employ physicians.

Countering AMA's principle that ACOs must be physician-led, Kocher and Sahni say that physician-control may be difficult to attain because it requires clinical, administrative and fiscal cooperation. “Physicians have seldom demonstrated the ability to effectively organize themselves into groups, agree on clinical guidelines and device ways to equitably distribute money,” the authors wrote.

“Since much of the savings from coordinating care will come from successfully avoiding tests, procedures, and hospitalizations, the question of how to divide profits among primary care physicians and specialists will be contentious,” Kocher and Sahni wrote.

But hospital-ACO control may also be difficult to attain and problems may stem from the fact that they would need to “trade near-term revenue for long-term savings.”Building an ACO will require hospitals to shift to a more outpatient-focused, coordinated care model and forgo some profits from procedures and admissions,” the authors wrote. “Hospitals’ decisions will be further complicated if payors do not change their payment models similarly and simultaneously.”

However, if physicians control ACOs, revenues will plummet and little compensatory growth in outpatient services will be seen. Kocher and Sahni said that under a hospital controlled system, facilities will acquire more savings, but physicians’ incomes would likely decline.

“Therefore, the actor who moves first effectively is likely to assume the momentum and dominate the local