The federal government is pushing hard for accountable care organizations. On July 1, eighty-nine ACOs opened in 40 states. The next wave to become operational on January 1, 2013 is even bigger. It has at least 400 provider groups on board, according to the Centers for Medicare & Medicaid Services.
On the commercial side, the formation of accountable care organizations is also steaming ahead. Aetna began contracting in 2011 and wants to develop a national ACO network over the next five years. With more than 18 million medical members, the Hartford, CT-based insurer has a company division dedicated to ACOs.
Led by Charles Kennedy, MD, CEO of Accountable Care Solutions, Aetna's Aligned Care Solutions division already has 10 ACOs up and running and 14 more under contract. Kennedy and his team are working with another 65 physician practices to lay the foundation for ACOs through a care management infrastructure embedded in physician practices. That's the first step toward getting them comfortable with managing risk.
I recently spoke with Dr. Kennedy about Aetna's ACO process. Here are some excerpts from our conversation:
HLM: How are the ACO contracts implemented?
Kennedy: The ACO contracts have to be multi-year because we are trying to reengineer the care delivery process and that can't be done in one year. We like a five-year relationship but we'll work with anything in the three- to five-year range.
We start out with a conversation: Where do you want to go? What's your vision? How do you see yourself achieving your vision? Once we understand that, then we talk about accountable care and what success in the accountable care contract requires.
Finally we focus on finances. What we are trying to do is take inefficiency out of the healthcare delivery system. We're trying to get rid of care that doesn't help people—and maybe even hurts them.
We're having a fundamental impact on the finances so we have to develop a plan that allows rewards for increased efficiency and doesn't harm the financial stability of the delivery system. That takes years to put in place.
HLM: What about risk sharing?
Kennedy: We have a variety of risk-sharing strategies that are customized to the needs and capabilities of our delivery system partners. We have some approaches where the risk-sharing is relatively small.
More experienced delivery systems that may have been involved with an HMO operation and have a deep understanding of risk management might take 80% of risk right off the bat.
HLM: Are you developing any specialty ACOs?
Kennedy: We do have some pediatric ACOs under development. Our general approach is that when you look at the main driver of healthcare costs, its chronic disease. Oncology is a costly, but 70 cents of every dollar spent on healthcare is spent on chronic disease management. Our priority is primary care medicine and its effect on chronic disease.
HLM: What does Aetna bring to the table?
Kennedy: We have deep expertise in financial risk management, which is fundamental for ACOs. We provide sales and marketing support to help commercialize the new value that's created when our partners are more effective and efficient. We bring results in care management. Finally we bring technology, which is increasingly important for ACO success.
HLM: How is success measured?
Kennedy: We typically look for quality and efficiency measures. Our quality measures are standard, well accepted, off-the-shelf measures from HEDIS (Healthcare Effectiveness Data and Information Set) and NQF (National Quality Forum). We try to align our quality measures as much as we can with federal measures.
We track financial performance and try to help the delivery system identify areas for improvement, such as looking at ER visits and readmission rates. We're also helping delivery systems understand their financial performance by disease state.
Are they making or losing money on congestive heart failure? Why? Can they do it better and cheaper while still maintaining the financial stability of the delivery system?
HLM: Any surprises?
Kennedy: The importance of governmental payment innovation in helping us create the type of financial returns necessary for delivery systems to embrace ACOs was a surprise. It's possible to do ACOs in a commercial environment, but it really sings when you can get Medicare aligned because there's so much waste and inefficiency in Medicare.
I thought there would be a certain amount of reticence on the part of delivery systems to embrace a collaborative relationship with a health plan. It's typically us versus them at the negotiating table.
But once you demonstrate that your business model is a win-win, I was amazed how quickly we shifted from being an opponent to a trusted friend. That's probably the most gratifying success we've had.
The challenges associated with adapting clinical health information technology to ACO operations surprised us. People seem to think if they buy an EMR or they have a health information exchange in place, then they are in great shape for ACO operations.
The challenge has been to get the technology adapted so it supports the contract variables for success. Most of the stuff that's out there isn't designed that way so that was more of a challenge.
I was surprised at how much help many of the delivery systems need. Some have technology that can't help them with an ACO, and they don't have a clear understanding of what they need to do to be successful at this.
Technology is a fundamental problem. The EMRs of today grew up before there was a notion of accountable care. If you're operating in a fee-for-service world, you need better documentation to maximize reimbursement. The challenge with an ACO is to turn that information into something that can be sent back to doctors to help them make decision consistent with evidence-based medicine.
Margaret Dick Tocknell is a reporter/editor with HealthLeaders Media.
