By Alan M. Schlein
Senior Wire 

What is an ACO and what does it mean to me?

Washington Watch


Editor’s note: The ACOs discussed in this national story have not reached Alaska, but the emphasis on outcomes for patients and reimbursing for coordinated care will become increasingly relevant to the health care system as a whole.

Big changes are coming for most seniors as the Obama administration aggressively

pushes to change the way doctors are paid – moving from tying their fees for every service provided to payments based on the quality of the care patients receive.

This means a big expansion in an effort by Medicare to keep seniors healthier by

coordinating basic medical care to prevent common problems that often lead to hospitalization.

Since she took over the Department of Health and Human Services Secretary in June, 2014, Sylvia Burwell has pushed aggressively to implement a revolutionary change in how health care is paid for – quality over quantity. Instead of doctors getting paid set fees for every procedure they perform, regardless of whether the patients get better, Medicare, she says, is

moving “from volume to value in the Medicare system.”

How to measure and evaluate the quality of care rather than the quantity has proven

difficult. So far, it’s been a mixed bag of results. Nonetheless, the Obama administration is moving ahead. So you are about to notice some big changes, if you haven’t already.

As the country’s largest payer of health-care services, Medicare influences medical care generally, so these changes will be felt in doctor’s offices and hospitals across the country. One change has already occurred and you might be a part of it without noticing. You may have been moved into an Accountable Care Organization (ACO). Already 8 million seniors are enrolled and that number is about to increase by another million seniors this year. ACOs are groups of providers who share in the savings – or losses – for managing patients on a budget.

That’s one out of every four seniors who are now going to be covered under this type of coverage. The administration’s goal is to get 50 percent of all Medicare payments based on how

healthy patients are as a result of treatment, instead of fee for service over the next two years.

Medicare’s current fee-for-service payment system cost taxpayers $362 billion in 2014, between the program’s hospital insurance and medical insurance programs, according to the federal Centers for Medicare and Medicaid Services.

The old way of paying doctors fails to discourage overuse of health-care services and critics say it doesn’t hold doctors accountable for whether a patient gets healthier or not. These new payment programs include lump sum payments for treating a patient all the way through a procedure – as when a patient has a knee or hip replacement surgery, for example.

Medicare has been experimenting with payment models for more than a decade, and the 2010 Affordable Care Act expanded payment models that reward doctors and health care providers toward value. Roughly 750 ACOs exist around the United States, servicing 23.5 million Medicare, Medicaid and commercially-insured patients.

Last month, Medicare announced a further expansion of the availability of ACO organizations, adding 121 new networks of doctors and hospitals that collaborate to better serve patients with chronic medical conditions. These new ACOs will get part of their payment from Medicare based on how well they meet the goals of improving quality and lowering costs. But patients with multiple chronic conditions, make finding measurable results is a bit harder to quantify.

A similar shift toward value-based payments has also been taking place in the private sector. More than 20 percent of provider payments by Blue Cross insurers are through contracts that try to prioritize quality over quantity, according to the Blue Cross Blue Shield Association.

Aetna, another large health care provider, says roughly 30 percent of its reimbursements are now in valued-based contracts and it expects that rate to jump to 75 percent by 2020.

ACOs and you

ACOs work to improve quality and lower costs. Part of their payment from Medicare is based on how well they meet those goals. It can be as simple as making sure patients receive regular follow-up visits and stay on their medications. Eliminating duplicative tests is another route to savings.

ACOs come in a variety of designs, according to the level of financial risk the groups themselves take on. So far, Medicare officials suggest, organizations that take more responsibility for the bottom line often do better on quality, because they have a greater incentive to keep patients healthy.

At the heart of ACOs is having a patient’s care coordinated by a primary-care physician. Each ACO has to manage the health care needs of a minimum of 5,000 Medicare beneficiaries for at least three years. But many of the larger ACOs have hundreds of thousands of patients; some of the new ones will be responsible for 650,000 patients.

Think of ACOs like you would the making of a television set. TVs are made by manufacturers who get component parts from many suppliers, and put it all together in one device. ACOs similarly bring together the different component parts for the patient – primary care specialists, hospitals, home health care – in the hope of getting all the parts to work together well.

To many, ACOs may sound a lot like health maintenance organizations. The critical difference is that an ACO patient is not required to stay in the network, the way an HMO patient is. In addition, ACOs must meet a long line of quality measures to ensure they are not saving money by stinting on necessary care. If you think you should be in one of these groups, Medicare suggests talking with your doctor or calling 1-800-633-4227 to find out if there is an ACO in your community.

The new approach tries to remake the way medical care is delivered to patients, by fostering teamwork among clinicians, emphasizing timely preventive services and paying close attention to patients’ transitions between hospital and home. For doctors, nurses and other providers, ACOs hold the promise of realigning the practice of medicine with the ideals of the profession – keeping the focus on patient health and the most appropriate care. So far, at least, some ACOs have become very adept at managing the health of their patient populations and predicting future costs.

But the jury is still out on its lasting impact. ACOs make doctors, hospitals and medical groups share the accountability for the health of the patient saving money by avoiding unnecessary tests and procedures. Those that save money while also meeting quality targets keep a portion of the savings. But that also means these organizations share the financial risks if they don’t save money.

To encourage organizations to continue as ACOs, Medicare has revamped the program somewhat and announced in February that it is launching “Next Generation ACOs.” Learning from past problems, these new ACOs will have greater flexibility in organizing how they deliver

care and also are refining the payment models to improve quality.

While ACOs are encouraged to jump all in to switch from fee-for-service to a different payment method, many will, as the well-respected peer-reviewed “Health Affairs” blog put it, “be tempted to keep one foot on the sturdy and familiar “dock” of FFS (fee for service), while the other foot is tentatively placed in the “boat” of alternative payment methods. That will be tough

to accomplish while still saving Medicare money.

Linking health and social service needs

In January, the federal government announced a $157 million new project designed to help hospitals and doctors link Medicare and Medicaid patients to needed social services that sometimes have a bigger impact on their health than medical interventions.

This could ultimately be a game changer for seniors, if it succeeds. For decades, public health experts have known that even with medical care easily available, patients are often limited in their ability to get better or maintain good health if they lack stable housing, access to healthy food or the ability to get to and from medical appointments.

The new “accountable health communities” project is designed to find better ways to identify patient’s non-medical needs and connect them to available services in their communities. The project will fund up to 44 separate experiments over five years related to housing, food, personal safety, a patient’s inability to pay utility bills and transportation needs.

Transportation is a big problem for many rural seniors, but the problem could also be as simple as someone help tightening the handrail in their home, or helping folks shop for the right kinds of foods or helping them prepare meals, that can ultimately lead to people not having to spend future time in hospitals. Or it could be a person with asthma who lives in a roach-infested apartment, and who keeps going back to the emergency room because substandard living conditions aggravate the disease.

One success story that could serve as a model for other communities is Hennepin Health in Minnesota, which serves low-income residents who are eligible for Medicaid. Hennepin has reduced both hospital and emergency room admissions among its caseload by trying to become a one-stop place for people who need both social and medical help.

The challenge for Medicare will be how to get these kinds of services to the people who need them the most. The struggle is that many health care professionals are not connected at all to the social service agencies. And sometimes, the bureaucracy that serves the poor makes

collaboration more difficult instead of easier.

But as payment systems move toward rewarding doctors for keeping patients healthy rather than simply doing things for them, this program is hoping to help bridge the gap that exists. Innovative programs that help sick elderly seniors get to and from medical appointments and help pay utility bills so people don’t have to choose between electricity and their medicines is a step in the right direction.

The grants will be awarded this fall, and the program is expected to commence early next year. President Obama’s health care law gave Medicare and Medicaid broad authority to carry out such experiments. It will be up to the next president to determine if this one works, and whether it’s worth building on.

Also contributing to this report was Kaiser Health News; the Washington Post; AP; Crains Detroit Business; RevCycle; Health Data Management and


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