- As alternative payment models like accountable care organizations (ACOs) start to replace fee-for-service models in healthcare, leaders must translate value-based care policies into realities that will benefit both patients and clinicians.
ACOs now cover more than 32 million individuals in the United States, according to a recent article by Ishani Ganguli, MD, MPH and Timothy Ferris, MD, MPH, published in the Journal of the American Medical Association (JAMA).
Although this may seem like a large number, Ganguli and Ferris point out that it is less than 20 percent of the country’s population, meaning the fee-for-service model is still prevalent.
According to the authors, the fee-for-service model is the basis for many of the flaws in the current healthcare system. Under this model, care is “often fragmented, expensive, and poorly communicated.”
ACOs and other alternative payment models seek to improve these flaws by switching the focus from quantity to quality and emphasizing better patient care.
However, as Ganguli and Ferris point out, it is difficult to translate this model into something equally beneficial for providers and patients. ACOs still have a number of challenges to overcome, including developing effective population health initiatives and managing numerous quality measures.
Financial sustainability and contradictory incentives
Alternative payment models each have different financial risk structures. The majority of ACOs are upside risk models. If providers manage to perform services at costs below payers’ financial benchmarks, they share in the savings; but they also aren’t financially penalized if costs exceed benchmarks.
Ganguli and Ferris state that many financial issues within ACOs stem from the fact that they were built on top of the existing fee-for-service structure.
“Clinicians in system-based ACOs face a complicated calculus in which savings from population health management efforts may not offset the cost of providing the new, unreimbursed services required, not to mention the fee-for-service revenue losses,” they write.
While the article acknowledges that addressing this problem will require changes to the ACO model, in the meantime, many organizations have transferred financial risk from individual clinicians to the organization as a whole.
The piece also suggests that organizations “mine enterprise-wide data for modifiable cost drivers and clinician outliers” to motivate improvements.
Variable performance and quality measures
ACOs must meet quality standards in order to accrue shared savings. While the industry has developed numerous frameworks outlining standards for quality care, organizations don’t always share the same standards.
“The reality is that ACOs face numerous, sometimes conflicting, performance measures from commercial and public payers,” Ganguli and Ferris write.
They add that “time lags and inaccuracies in these largely claims-based metrics” often leave clinicians uncertain about their ability to make meaningful improvements.
Comprehensive, real-time data access plays a major role in clinicians’ ability to improve care and reduce spending.
“Systems can integrate disparate performance measures into a cohesive framework for clinicians and measure electronic health record-based metrics that are more meaningful to clinicians and patients,” the article suggests.
Challenges of implementing change
As Ganguli and Ferris point out, making the shift from fee-for-service to value-based care is difficult and costly.
“Efforts like video-based patient education or expedited transfers to postacute care are organized as discrete programs that are implemented division by division, cost money to launch, and rarely pay off right away, if at all,” they write.
ACOs require that organizations spend money to implement ACO programs, but simultaneously ask that clinicians reduce costs. Ganguli and Ferris note that this might cause clinicians to distrust the change process.
To alleviate this, the authors suggest that leaders “articulate a vision through both words and action that makes sense of this disconnect and demonstrate their commitment to value-based care.”
Applying population health management equally
While clinicians aim to offer population health management programs to all who might benefit from them, this isn’t always easy under some ACO contracts.
“ACO contracts incentivize clinicians to focus their efforts on the minority (in most systems) of patients with a certain insurance plan and an ACO-affiliated primary care physician,” the article says.
“Meanwhile, patients usually do not choose to join an ACO, and many may be unaware that they belong to one.”
Ganguli and Ferris propose that in some programs, it is possible to include all patients at the outset. For programs with higher variable costs, organizations can offer spots to non-ACO patients.
The shift from fee-for-service models to alternative payment models like ACOs promises to improve patient care at more modest costs.
“In the process, some tensions may be inevitable,” the article concludes. “But if these efforts result in better care for patients, they will be worth the trouble.”