Blog | Thursday, April 14, 2011

QD: News Every Day--Health care reacts to accountable care arrangements

Reactions to the proposed government regulations about accountable care organizations (ACO) see potential for physician profit and for loss, but they also predict a day when such arrangements will be the norm.

The federal government released a proposed rule April 1 that outlines a wide-reaching array of how these arrangements might be created and managed (free registration required). But, organizations that can enter these arrangements eventually will have to, some say.

The government's role is to begin contracting with ACOs for covered lives beginning in January. The goal is to try and recoup between $510 million and $960 million during the first three years through 75 to 150 ACOs that would cover anywhere between 1.5 million to 5 million of Medicare’s 47 million beneficiaries. While there are no projections, some "napkin math" estimates that the savings for Medicare enrollees who participate in ACOs could reach anywhere from $126 million to $438 million, or $32 to $292 per enrollee, in coming years.

But in short, ACOs won't include small and solo practices, and it's not for the faint of heart. Health and Human Services estimated such arrangements could cost $1.7 million to start, based on the experiences of 10 pilot projects. Providers must provide primary care for at least 5,000 patients. And, they will be reimbursed on 65 quality standards organized around patient experience, patient safety and the degree of care coordination, among other areas.

According to a report by The Commonwealth Fund (co-authored by two ACP Fellows, Stephen C. Schoenbaum, MD, MPH, and Anne-Marie J. Audet, MD), a strong base in primary care and the patient-centered medical home is an absolute must.

The report continues that three organizational models could work: advanced primary care practices with specialist referral networks; multispecialty physician group practices; and integrated health care organizations. But other ways work, too, the report notes:
--Blue Cross Blue Shield of Michigan and Community Care of North Carolina use primary care medical home fees to encourage coordination of patient care.
--Geisinger Health System in Pennsylvania uses bundled acute case rates, which cover a range of patient services during a specified time interval around an acute care event, like a hospital admission.
--HealthPartners in Minnesota, Intermountain Healthcare in Utah, Blue Cross Blue Shield of Massachusetts, and Kaiser Permanente use global fees, a payment rate that covers all the health care provided to an individual during a specified time interval.

Pilot programs have shown successes. California Public Employees Retirement System, a two-year pilot that involves 41,000 insured lives, saw (free registration required) in a 10-month span hospital readmissions decline by 17%; average patient length of inpatient stay decline by a half-day, total patient inpatient days decline by 14%, and number of patients who stayed in the hospital for 20 days or more decline by 50%. The pilot is expected to result in $5 million in savings.