What are ACOs, and has the train already left the station?

October 21, 2010
Ronald Piana

The Affordable Care Act establishes a voluntary program for accountable care organizations (ACOs) by January 2012. What does it mean for oncology?

The Affordable Care Act establishes a voluntary program for accountable care organizations (ACOs) by January 2012. What does it mean for oncology?

The term Accountable Care Organization was originated by Elliott Fisher of the Dartmouth Center for the Evaluative Clinical Sciences, picked up by the Medicare Payment Advisory Commission and then enshrined in Section 3022 of the Patient Protection and Affordable Care Act (otherwise known as health care reform). The language is explicitly designed to use financial incentives to change the health care delivery system.

An article in Health Affairs by Elliot Fisher outlined possible models:    

1. Integrated Delivery Systems. Integrated delivery systems involve a common ownership of hospitals, physician practices, and-in some cases-an insurance plan. Some examples are Kaiser Permanente, Group Health Cooperative of Puget Sound, and Geisinger Health System. These systems typically have aligned financial incentives, electronic health records, team-based care, and resources to support cost-effective care.

2. Multispecialty Group Practices. Multispecialty group practices usually own or have a strong affiliation with a hospital. Examples of this type of arrangement include Mayo Clinic and Cleveland Clinic. They usually do not own a health plan but, rather, have contracts with multiple health plans in their areas. Most have a long history of physician leadership and highly developed mechanisms for providing coordinated clinical care.

3. Physician-Hospital Organizations These organizations are a subset of the hospital’s medical staff. One example is Advocate Health in Chicago. Most were formed in the 1990s in response to managed care pressures to negotiate with health plans. Some function like multispecialty group practices, focusing on reorganizing the delivery of care to achieve more cost-effective coordination. Although they may be less well suited than integrated delivery systems or multispecialty practices to qualify as ACOs, many could structure themselves to meet the criteria for that type of organization.

4. Independent Practice Associations. Independent practice associations consist of individual physician practices that came together largely for purposes of contracting with health plans. Over time, however, many of these have evolved into more-organized networks of practices that are actively engaged in practice redesign, quality improvement initiatives, and implementation of electronic health records. One example is Hill Physicians Group, in Northern California. Such organizations could qualify as ACOs, and that might encourage other independent practice associations to evolve similarly, given sufficiently strong financial incentives and technical assistance.

5. Virtual Physician Organizations. Finally, a number of small, independent physician practices, many located in rural areas, can organize to become “virtual” physician organizations, such as Community Care of North Carolina. This process can be led by individual physicians in rural areas or by a local medical foundation, state Medicaid agency, or similar organization that can provide the leadership, infrastructure, and resources to help small practices develop disease registries; implement electronic health records; share information; and provide better-coordinated, cost-effective care. These virtual networks could qualify as ACOs and serve as models for other groups of small practices.

But according to an article by Patrick Cobb, immediate past President of the Community Oncology Alliance and Chairman of the COA Policy Committee :

Who comes first for the oncologist-patient or payer?

The burning question is “who” oncologists are accountable to-payers (in finding cost savings), or their patients (in providing quality cancer care)? Certainly, at a time when cancer incidence and treatment costs are both increasing, oncologists bear some responsibility for controlling costs. The strategies for doing so include providing care, for example, that minimizes emergency room visits and hospitalizations and using evidence-based guidelines to control treatment costs, when possible.

However, first and foremost, oncologists are accountable to their patients in providing the highest quality cancer care. Adherence to this mission has produced dramatic results-the United States has the world’s best cancer care delivery system, as documented by 5-year survival rates. Interestingly, this practice has also produced overall cost savings by shifting care from the inpatient hospital setting to the outpatient community setting. As a result, the share of total cancer costs attributable to inpatient (hospital) admissions declined, from 64.4% in 1987 to 27.5% in 2001−2005.

As public policy adds to the alphabet soup of ideas to contain escalating medical costs, it is important to make sure that physicians first remain accountable to their patients, who depend on them for care. This is especially true in oncology, where the gains achieved by the world’s best cancer care delivery system hang in the balance.