Getting Up to Speed on Accountable Care Organizations

The basic premise of the accountable care organization (ACO)

No one would disagree that better quality of service for less cost is highly desirable in any industry. The healthcare delivery industry has long lagged behind other industries in this area.

Encouraged by incentives in the Affordable Care Act (ACA), a new approach to healthcare delivery, the accountable care organization (ACO), has become a leading patient care model. ACOs are groups of primary care physicians, specialists, hospitals and other health care providers who come together voluntarily to give coordinated, high-quality care to the patients they serve.

The basis of the ACO model can be summarized with the acronym PEACE:

Prevention of illness and disease
Evidence-based treatment
Access to care resources
Coordinated medical care team
Electronic health records

We can look at each of these points and explore how and why the ACO model may be a good start to improving the healthcare delivery system in America.

Prevention of illness and disease. The best way to control health care costs is to stay healthy. Reducing readmissions and hospitalizations for preventable conditions alone could save the Medicare program at least $12 billion per year. It is estimated that 50% of Americans do not get the preventive care and screening tests that science recommends. ACOs believe in wellness and preventive care. Patients receive reminders for the tests, screenings and immunizations they need, and health information, classes and advice are easy to get.

Evidence-based treatment. Scientific advances are so rapid that no single physician can keep up with all of the current and best treatment options. ACOs support their patients and doctors by providing information about up-to-date treatments based on research and evidence.

Access to care resources. A significant number of Americans do not get the recommended health counseling and education for their conditions. The goal of ACOs is to provide the right care at the right time. ACO patients can get professional medical advice day or night, in offices, by phone and even by email. Quick treatment helps maintain health and reduces cost.

Coordinated medical care team. It is estimated that unnecessary care, or overtreatment, kills 30,000 Americans a year. Care teams and care coordination are very important when patients need to see more than one doctor or are hospitalized. In the ACO model, coordinating patient care among all of the care providers ensures that each one knows what the others are doing for the patient.

Electronic health records. The Institute of Medicine (IOM) has estimated that 44,000 to 99,000 patients die in hospitals each year because of medical errors, and that there could be at least 1.5 million preventable adverse drug events in the U.S. every year. A high percentage of U.S. patients have reported that medical records and test results were not available during a visit, or that tests were duplicated unnecessarily. Shared electronic medical records help both primary care doctors and specialists know the patient’s entire health history, the drugs that have been prescribed and the test results. This improves the cost, quality and safety of the care provided.

Four typical ACO models

These five principles are part of the 4 typical ACO models identified by Leavitt Partners:

ACOs formed by smaller physician groups. These involve fewer physicians and patients and may allow more personal patient engagement and coordination of care. Example: Primary Partners in Florida includes 55 physicians serving 7,500 patients in the Orlando area.
ACOs governed by large hospitals, where ACO principles are built into the existing practices of the parent health system. Example: Abington Health contracts with Independence Blue Cross to provide care in two hospitals and several outpatient facilities in eastern Pennsylvania.
Combinations of entities that include multiple hospitals and physician groups. Example: OSF Healthcare System in Peoria, Illinois, provides care in eight hospitals through more than 700 physicians in the OSF Medical Group. In July 2013, a group of 23 acute care hospitals and 1,700 non-acute care providers in central and southern Georgia formed a not-for-profit limited liability corporation called Stratus Healthcare. It was designed as a way for its members to collaborate while remaining independent. The members intend to follow the principles of the ACO without officially participating in a shared savings program.
ACOs formed by states for Medicaid, CHIP and other state-managed health care populations, called Regional Care Collaborative Organizations (RCCOs). Example: The Colorado Community Health Alliance, serving Boulder and the surrounding counties, includes 260 physicians from three entities: Centura Health System, Physicians Health Partners and Primary Physician Partners. Delaware is currently the only state without an ACO. The Delaware Health Care Commission recently issued a request for proposals for a Statewide Health Care Innovation Plan, with submissions due September 17, 2013.

ACO availability and statistics

Leavitt Partners, a research firm that has tracked the growth of accountable care organizations since 2010, described its observations in a new report, “Growth and Dispersion of ACOs: August 2013 Update.” Some details from the report:

There were 488 ACOs through July 2013, according to Leavitt Partners. That is more than twice the number in June 2012.
All 50 states, the District of Columbia and Puerto Rico now have ACOs.
The states with the highest populations (California, Florida, Texas and the Northeast) typically have the highest number of ACOs.
The South, Great Plains and Midwest have seen steady growth in ACO creation.
Non-Medicare ACOs used to be the majority. Now 52% of ACOs are contracted with Medicare, either through the Medicare Shared Savings Program or the Pioneer ACO Model.
Medicare ACOs are concentrated in Florida, Boston and Southern California, with some areas containing up to 15 ACOs.

Medicare reports on its ACO progress

CMS plays a central role in the ACO movement through its Pioneer ACO Model. In calendar year 2012, 32 organizations from Maine to California participated in this program. In July 2013, CMS published results for the first year of the program. The results showed success in improving the quality of care and lowering Medicare costs.

Pioneer ACO savings

Program savings came in part from reductions that Pioneer ACOs made in hospital admissions and readmissions.

Costs for the more than 669,000 beneficiaries aligned to Pioneer ACOs grew by only 0.3% in 2012, while costs for similar beneficiaries grew by 0.8% in the same period.
13 of the 32 Pioneer ACOs produced shared savings with CMS. They generated gross savings of $87.6 million in 2012 and saved nearly $33 million for the Medicare Trust Funds.
Pioneer ACOs earned over $76 million by providing coordinated, quality care. Franciscan St. Francis Health earned a $6.6 million bonus from the Medicare program.

Pioneer ACO quality

All 32 Pioneer ACOs successfully reported quality measures and achieved the maximum reporting rate for the first performance year, and all earned incentive payments for their reporting. Overall, Pioneer ACOs performed better than published rates in fee-for-service Medicare on all 15 clinical quality measures for which comparable data are available. Seven measures had no comparable data in the published literature. Examples of the high-quality care provided by the Pioneer ACOs include:

Readmissions: 25 of the 32 Pioneer ACOs had lower risk-adjusted readmission rates for their aligned beneficiaries than the benchmark rate for all Medicare fee-for-service beneficiaries.
Blood pressure control: Pioneer ACOs performed better on clinical quality measures for hypertension control. The median rate of blood pressure control among Pioneer ACO beneficiaries with diabetes was 68%, compared with 55% in an adult diabetic population in 10 managed care plans across 7 states from 2000 to 2001.
Cholesterol control for diabetes patients: Pioneer ACOs performed better on clinical quality measures for low-density lipoprotein (LDL) control in patients with diabetes. The median rate of LDL control among Pioneer ACO beneficiaries with diabetes was 57%, compared with 48% in an adult diabetic population in 10 managed care plans across 7 states from 2000 to 2001.

In addition, ACO beneficiaries rated Pioneer ACOs higher on all four patient experience measures than the 2011 Medicare fee-for-service results.

Other information

To learn more about the Pioneer ACO Model, visit the CMS Pioneer ACO Model page. CMS also publishes information on the models available to providers and on the incentives in the Affordable Care Act that have been lowering costs and improving care. General information on ACOs is available from CMS and HealthCare.gov.

Commercial payers are joining in

Three national commercial payers, Aetna, Cigna and UnitedHealth Group, are each involved in ACOs. They partner with institutions and physician groups to bring the benefits of the model to their patients and to reduce their own costs.

Aetna

Aetna’s website describes its position on the ACO model. Aetna began using ACOs in 2007 with its Medicare Advantage ACO. It is in talks to add about 200 more ACOs for its members.

In May 2013, Aetna reached an agreement with Riverside Health System, its third Accountable Care Solutions contract in Virginia. The agreement gives most of Aetna’s 500,000 Virginia members access to care through the accountable care model and a new provider network called Coastal Virginia Health Partners. The network will include Riverside Health System, Bon Secours Health System, Children’s Hospital of The King’s Daughters and Chesapeake Regional Medical Center.

In July 2013, Aetna partnered with New Haven Community Medical Group (NHCMG) in Connecticut. The agreement will include nearly 5,800 Aetna members covered under fully insured plans in the Greater New Haven area.

More recently, Aetna announced agreements with five Maine health systems or medical groups: InterMed, Mercy Health System, MaineHealth, Martin’s Point Health Care and MaineGeneral Health. These are its first contracts with hospitals in that state, and they bring the insurer’s total number of ACO contracts to 27.

Aetna reported these 2012 results for its Maine Medicare Advantage ACO:

45% reduction in hospital admissions
50% fewer patient hospital days
$600 annual savings per patient

Cigna

Cigna uses the term collaborative accountable care (CAC) for its ACO-like programs. There are currently 66 available in 26 states.

These programs include more than 700,000 commercial customers and more than 27,000 doctors, including more than 12,500 primary care physicians and nearly 14,500 specialists.

Cigna launched its first CAC program in 2008. Its goal is 100 CACs providing care to one million customers in 2014. Examples of the variety of current CAC programs include:

ProHealth Physicians in Connecticut and Medical Clinic of North Texas in the Dallas/Fort Worth area, which are large primary care groups
Holston Medical Group in northeastern Tennessee, a multi-specialty physician group
Piedmont Physicians Group in Atlanta, including physicians and facilities
Health Choice in Memphis, a Physician Hospital Organization (PHO)
Renaissance Physician Organization in Houston, an Independent Physician Association (IPA)

A recent addition to the Cigna CAC portfolio, in July 2013, is CaroMont Medical Group, which plans to expand its collaborative accountable care program across the Carolinas.

During calendar year 2012, the Jackson Clinic, a Cigna CAC in Jackson, Tennessee, outperformed its peers on a number of important measures:

19% better than market for annual eye exams for people with diabetes
25% better than market for annual kidney disease screenings for people with diabetes
7% better than market for breast cancer screenings
50% better than market for adolescent well-care visits
5% lower than market for the overall total medical cost trend
10.5% better than market for the inpatient hospital cost trend
Half the market rate of frequent emergency room users
70% better than market for the referral rate to Cigna Care Designated specialists

UnitedHealth Group

In July 2013, UnitedHealth, the largest U.S. insurer, reported spending $20 billion on ACO contracts. It said the contracts slowed increases in medical costs and reduced ER visits by 17%. The company predicts these payments will more than double to about $50 billion by 2017.

The company insured about 42 million people as of March 30, 2013. In January 2013, it reported spending $80.2 billion on medical claims in 2012.

UnitedHealth has had successful operations with ACOs such as:

Southern Arizona Accountable Care Organization (SAACO), including Tucson Medical Center and independent physicians in the community
WESTMED Medical Group, a multi-specialty group practice of more than 220 physicians in Westchester County, New York

UnitedHealth has also entered into recent arrangements with ACOs such as:

Mount Carmel Health Partners of Columbus, Ohio
Seton Health Alliance of Austin, Texas

Benefits UnitedHealth reported from its ACOs include:

Reduced the use of out-of-network laboratory services by 25%
Shortened the average hospital stay for organ transplant patients by a quarter
Reduced the rise in medical costs under accountable care programs by almost 4.5%

Patient’s guide to accountable care organizations

The basis of the ACO model can be summarized with the acronym PEACE:

Prevention of illness and disease. The best way to control health care costs is to stay healthy. ACOs believe in wellness and preventive care. You get reminders for the tests, screenings and immunizations you need, and health information, classes and advice are easy to get.

Access to care resources. A significant number of Americans do not get the recommended health counseling and education for their conditions. The goal of ACOs is to provide the right care at the right time. Patients can get professional medical advice day or night, in offices, by phone and even by email.

Coordinated medical care team. Care teams and care coordination are very important when you need to see more than one doctor or you need to be hospitalized. In the ACO model, coordinating your care among all of your care providers ensures that each one knows what the others are doing for you.

Electronic health records. Shared electronic medical records help both your primary care doctor and your specialists know your entire health history, the drugs you have been prescribed and your test results. This improves the cost, quality and safety of the care you receive.

What has changed since this was written

The Pioneer ACO Model has ended. The Pioneer model ended after 2016. CMS followed it with the Next Generation ACO Model, which ended in 2021, and then ACO REACH, which runs through 2026. See the CMS Innovation Center models page.
The Medicare Shared Savings Program was restructured. Since 2019, the program’s “Pathways to Success” rules place ACOs in a BASIC or ENHANCED track, and ACOs move toward taking on financial risk over time. See the CMS Shared Savings Program page.
MACRA changed how ACO clinicians are paid. Since 2017, Medicare clinicians report quality through MIPS or participate in Advanced APMs, which include some ACO tracks, instead of the PQRS and EHR incentive programs. See A Dozen Facts About MACRA and MIPS 2026 for radiation oncology.
The counts and contracts in this eBook describe 2013. The number of ACOs, the payer contracts and the state-by-state details have changed since this was written, so check current CMS and payer sources before relying on them.

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