… particularly those in physician-led ACOs
ACOs are groups of doctors, hospitals, and other healthcare providers who join together to give coordinated, high-quality care to Medicare patients, according to the Centers for Medicare & Medicaid Services. Their common goal is ensuring that patients get the right care at the right time – cost-effectively, of course – while avoiding duplication of services and preventing medical errors. Those that succeed share some of the savings with the Medicare program.
From 2010 to 2015, hospitals or health systems sponsored the majority of new ACOs. But in recent years, the ACO market has seen a shift, as physician group organizations have begun to lead the majority of new ACOs. In 2018, physician-group-led ACOs represented approximately 45% of all ACOs, hospital-led ACOs accounted for approximately 25%, and joint-led ACOs represented 30%. Experts believe there is greater market potential for new physician-led ACOs than for those led by hospital systems.
COVID-19 has been a big driver, according to David Muhlestein, chief strategist and chief research officer, Leavitt Partners. During the pandemic, practices that were dependent on fee-for-service saw dramatic drops in patient volume, and hence, revenues, says Muhlestein, who focuses on healthcare payment and delivery transformation. But those that were paid on another basis, such as value-based care, didn’t suffer so much. “The difference in the two types of payments is like the difference between getting paid on commission or salary. Commission is great so long as sales are coming in, but if there’s a downturn, salary can be really valuable.”
Size doesn’t really matter
Muhlestein says physician-led ACOs may include as few as 15 physicians or as many as a thousand or more. Most commonly, however, they tend to be in the 50-to-100-physician range, he says.
“Some are in the same market as large hospital systems, some are in rural areas, and some are in mid-size markets where there are no other ACOs. All it takes is someone to say, ‘We want to take care of patients differently, and now there’s a payment model that can accommodate that.’” Third-party companies, referred to as ACO enablers, have arisen to help physician groups manage risk, that is, balance the financial and care-delivery components of an ACO.
Kim Harmon, vice president for ACO services for TMA PracticeEdge, a subsidiary of the Texas Medical Association, notes that its client base represents solo and small physician practices who provide care in their local communities. “While ACO size varies, 50 to 150 physicians will typically generate the 5,000 to 7,000 patient lives required by payers for participation in a contract,” she says.
“Low-revenue” ACOs, as physician-led ACOs are increasingly referred to, have performed better than “high-revenue” ACOs, that is, those led by hospitals and health systems, points out CMS Administrator Seema Verma. In 2019, low-revenue ACOs had net per-beneficiary savings of $201 compared to $80 per beneficiary savings for high-revenue ACOs. The trend is the same for ACOs in the new Pathways to Success program, in which low-revenue ACOs had net per-beneficiary savings of $189 while high-revenue ACOs had net per-beneficiary savings of $155. (Introduced in December 2018, Pathways to Success reduced the amount of time an ACO could remain in the program before accepting financial risk along with potential shared savings.)
Two factors favoring physician-led ACOs are market size and potential, says Muhlestein. Simply put, physician groups outnumber health systems, and enjoy many more market opportunities. In addition, physician-led ACOs achieve significant cost-savings by reducing inpatient admissions. On the other hand, health-system-led ACOs, whose inpatient facilities still collect revenues based on admissions, may hesitate to do the same.
No physician ACO is an island
In order to provide the total continuum of care for patients, physician-led ACOs must build relationships with other providers. “Physician-led ACOs are responsible for the cost of care at the global level even though they’re unable to directly provide it,” says Muhlestein.
Harmon points out that TMA PracticeEdge’s ACOs are composed solely of primary care physicians who serve as medical homes for their patients. “But that doesn’t mean they are an island,” she says. “They identify specialists in their areas who are good communicators and provide cost-effective and quality care. Preferred urgent care centers help them offer after-hours care, and independent hospitalists manage care in the inpatient setting. Around all of this is a group of care coordinators who help with care transition and checking in on patients between office visits.”
Josh Seidman, managing director, Avalere, says that some large practices already include a number of specialists, while others contract with a select set of specialists for particular issues that commonly arise among their patients. Such specialists, e.g., cardiologists or psychiatrists, might spend one or two days a week in the practice, or are just a telehealth visit away, says Seidman, who advises clients on value-based care models with a focus on information technology. Some ACOs form relationships with hospitalists to oversee the care of patients when they are in an inpatient facility or to stay in touch with emergency department physicians when patients are in hospital EDs. The success of these systems rests on good data exchange between the hospitalist and the ACO, including admission/discharge/transfer (ADT) data.
The long run
Culture change like this doesn’t happen overnight.
Historically, physicians haven’t been trained to proactively identify patients with needs and figure out how to address those needs in advance of them flaring up, says Seidman. “It’s a big shift in approach. Then there is this idea of physicians operating as a team. Even more important is each person understanding their role within that team.
“Physicians aren’t necessarily the best-equipped people to figure out how to help people adopt more healthy behaviors or how to meet a wide array of their social or other needs that have an impact on health,” he continues. “A social worker, health coach or community health worker might be in a better position to do so. Physicians are trained to deal with complex clinical matters, but they have to think about the overall needs of the patient, some of which can be addressed by other professionals.”
Medicare data shows that experience matters, says Seidman. “Physician-led ACOs do better over time – not surprising for anything that requires significant effort.”
Will ACOs, like many healthcare trends, such as HMOs – be relegated to the ash heap of history? How long can they deliver savings and improve quality of care?
“There definitely are things you might call low-hanging fruit in terms of reducing unnecessary hospitalizations and readmissions,” says Seidman. “But shifting your approach in how care teams are organized and social needs are addressed is important for long-term improvements in efficiency and quality.”
ACOs may very well succeed where HMOs didn’t, says Muhlestein. Unlike HMOs, ACOs offer patients the flexibility to switch providers. Even more important, HMOs focused almost exclusively on reducing the cost of care, which meant gatekeepers, prior authorizations – in a nutshell, barriers to care. While ACOs share concerns about cutting costs, they also work to meet goals for quality-of-care and patient satisfaction.
“If you move away from shared savings models to full delegated risk capitated payment, you can perpetuate these programs,” he says. “Physician groups are starting to accept risk. It’s not for everyone; it’s a dramatically different approach to care. For physicians, it’s moving away from, ‘I am taking care of this patient in front of me,’ to ‘I need to be aware of everything about this patient, and if he or she has needs I can’t provide for, I need to create partnerships or arrangements with other providers.’ It’s management.
“Some have already been successful doing this – enough so that many others are now open to the idea.”
The Journal of Healthcare Contracting asked Kim Harmon, vice president for ACO services for TMA PracticeEdge, a subsidiary of the Texas Medical Association, about lessons the organization has learned – and the biggest surprises it has encountered – while forming and nurturing physician-led accountable care organizations. She listed three:
- Smart growth is important. An ACO doesn’t need every physician in the community to participate. Focus instead on those who are engaged and willing to learn from the data provided.
- Success in value-based care models takes times. Physicians get frustrated when they don’t see immediate results/rewards. Shared-savings contracts are paid out 6-8 months after the end of the performance year. The longer physicians participate, the better they become.
- The biggest surprise has been the number of emergency visits generated by conditions that could easily be treated in a primary care practice. Many patients do not take the time to establish a medical home. When unexpected health issues arise, they feel compelled to visit hospital emergency departments for a quick (and expensive) fix.