Multi-disciplinary delivery systems have been around for decades. Some such as the Montefiore System in the Bronx have done extraordinarily well—others not so well. With the passage of PPACA (Obamacare) several years ago, ACOs came front and center for a new run. In PPACA, it was only for the Medicare and Medicaid programs, but the healthcare system could see the handwriting on the wall. This time, ACOs are here to stay.

Basic Medicare and Medicaid ACOs are reimbursed under the Medicare Shared Savings Program (MSSP). The MSSP has started out slowly, giving ACOs an opportunity to get their feet wet by sharing savings, but not sharing losses. Additionally, the so-called Pioneer ACO Model limits participation to healthcare organizations which are already experienced in providing the full range of services to their patients in a coordinated care process. It exists outside the current MSSP and allows ACOs to move more rapidly from the MSSP Model to a population-based payment model with more substantial sharing (taking on risk) of cost savings and cost overruns. And it’s available to private payors (insurers) in a way that should make them very interested. Its stated mission is to improve quality and health outcomes for patients across the ACO and achieve cost savings for payors, employers, and patients. That has been healthcare financing’s elusive Holy Grail forever.

As I’ve written many times, payment reform and risk sharing, population-based models, and multi-disciplinary delivery of care on an accountable basis is indeed the ONLY way to go in the future. There simply are no other credible paths to take. And yet, today it is fair to say that most ACOs are having a difficult time making it work financially, and a number have dropped out of the MSSP altogether. That truly is a shame.

Why is this? Why aren’t providers moving more quickly…more aggressively…more successfully toward this model? One clear reason is that at least in PPACA for the Medicare and Medicaid programs, ACOs cannot require their patients to receive all of their care within that ACO or by ACO approved providers. While so called “restrictive networks” have been the third rail of healthcare for the last 30 years (as in Hillarycare in the early 90’s—remember the Harry and Louise ads?), we must get over that taboo. Otherwise, how can we hold an ACO accountable if their patient population can get its care anywhere? The first word in ACO is “accountable.” While Americans dislike restrictive networks, if it can be proved that their restrictive network has high quality, better outcomes, and lower costs, it might soften the blow a bit.

Another reason for the poor results so far is the lack of basic, clear, and reasonably achievable standards of quality and outcomes. We must start out somewhat slowly here and not expect decades of poor practice modalities to be overcome instantly. An example. Many physicians simply cannot get used to the fact that what impacts outcomes the most often were not reimbursed and may be very different from what they did 5 years ago. For example, follow-up reminders; taking time to educate their patients; post surgical home visits by licensed clinical social workers; doing other things that in the fee for service world were not paid for but now may be via improved outcomes-based reimbursement.

Coordination and communication across the delivery spectrum have always been problematic. Even with interoperable EMRs, we still have to have the will to use them effectively. Physicians would rather be doing something other than looking at a computer screen. And it may be too much to expect all physicians to do that, but someone associated with such physicians MUST. Thus, the concept of physician “extenders” will flourish in the near future. Whatever it takes to improve quality and outcomes, and reduce costs of care.

ACOs sometimes forget that whoever manages the “Five Percenters” best wins. Insurers know that 5% of their insured population account for at least 55% of their claims cost. The chronic and acute patients. If an ACO can manage that population better, and in coming years slow the influx of people into that Five Percenter population, it will do very well financially. And do God’s work. However, ACOs must first identify the Five Percenters. Then they must know EVERYTHING about those patients. They should know what color socks they put on in the morning, what they weigh THIS WEEK, etc. And then the outreach.

Lastly, ACOs should want to be held accountable for a relatively sicker population. In years past, I’d estimate that about 75% of providers held the opinion that their patients were on average sicker than the general population. Under the new reimbursement system, payments will depend on moving the needle on the assigned population’s overall health. Generally it is easier to show improved health for a sicker population if the proper steps are taken. That should equate to increased reimbursement. And today, it’s simple to do a risk analysis to determine just how sick a population is.

In summary, provider groups and ACOs must work with renewed vigor toward a full transformation within the Pioneer ACO Model, because one way or the other, it won’t be optional.

Please let me know if you agree or disagree, and be as specific as you can. There’s room here for differing opinions.

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