Evidence-Based Diabetes Management
September 2013
Volume 19
Issue SP7

Accountable Care Organizations: How to Define Quality?


These days, talk about “quality” factors into every discussion of healthcare. So how do the nation’s 449 accountable care organizations (ACOs) and ACOlike entities sponsored by hospital systems, physicians’ groups, insurers, and community organizations1 around the country define quality?

There’s no shortage of data and metrics surrounding how effectively hospitals and doctors’ groups claim to be delivering care, yet pinning down what it means to deliver quality care is difficult.

Trying to define quality may well prove elusive, as ACOs are less rooted in amending the patient experience than they are in turning industry work flows and hierarchies upside down.

“ACOs are not an attempt to change the patients, but an attempt to change the (healthcare) delivery system,”said Jeffrey Brenner, MD, founder and executive director of the Camden Coalition of Healthcare Providers.

Under the 2010 Affordable Care Act (ACA), the nation’s healthcare system bears financial risk for delivering better care, and the industry is experimenting by rearranging the relationship between those who provide care—doctors, nurses, specialists, and technicians— and those who pay for it, such as insurance companies, major employers who self-insure, and federal and state governments.

ACOs, which integrate care across healthcare providers, are catching on, and ACOs and ACO-like entities operate in as many as 45 states.1 Between 25 million and 31 million Americans are receiving healthcare services through an ACO, and more than 40% of Americans—126 million people—live in areas with at least 1 ACO, estimate Rick Weil, partner, and Niyum Gandhi, associate partner, in the Health and Life Sciences Practice of the consulting firm Oliver Wyman.

As of November 1, 2012, there were 328 ACOs, up from 221 at the end of May 2012, and 164 in September 2011, according to Leavitt Partners.2

While the near-term growth of ACOs seems assured, the jury is still out on the question of whether ACOs can deliver the requisite quality of care to have any measurable impact on long-term costs.

Even if there is no consensus about what quality care entails, initiatives in the marketplace hold clues to the future of how ACOs plan to deliver better care.

Quality and Metrics

Future healthcare quality can’t be improved unless hospitals and doctors know how well or poorly they are performing today. It’s no surprise, then, that ACOs are sticklers for metrics.

Nationwide Children’s Hospital (NCH) in Columbus, Ohio, a sponsor member of the Partners for Kids ACO, which serves more than 300,000 children, tracks its metrics with impressive granularity.

Drug errors, surgical infections, bloodborne infections, and rates of pneumonia associated with ventilator use are reported quarterly and monthly. Even staff compliance with washing hands is plotted on a graph.

The hospital, which serves a pediatric Medicaid population in a 34-county area in central and southeastern Ohio, reports that the number of catheterassociated bloodstream infections has dropped to 0.5-per-1000 catheter days in the first quarter of this year, from an average of 5.1 per 1000 in 2004.

Data collected in separate quality indicators show the hospital doing very well, and that is one measure of better quality. “We try to show metrics of kids getting better,” said Kelly Kelleher, MD, vice president of community health at NCH and a research adviser to Partners for Kids.

Kelleher said that fewer children with asthma and neurologic problems have been admitted to NCH’s emergency department, and the decline in the rate of pre-term births compared with that of other regions is a sign that the quality of care has improved. “That’s how we’ve improved outcomes,” he said.

Even with a 1% decline in the use of neonatal intensive care units (NICUs), multiply that by every child admitted to the NICU at $3000 a day over the course of a year, and the numbers start to add up, he said.

NCH participates in pediatric quality measurement programs promulgated by the Centers for Medicare & Medicaid Services (CMS) and the Agency for Healthcare Research and Quality (AHRQ), and quality measures are set by the government.

For all of NCH’s measurements, the question of whether the quality of its care improves the lives of children is, to some extent, one ultimately inferred from the data.

Short of going out and conducting large-scale surveys of families and the progress of their children, which is expensive and not reimbursed by Medicaid, Kelleher said, it’s difficult to know if the quality delivered to a child today is truly any better than the care received 5 years ago.

Quality and Providers

Like an anchor tenant in a retail mall, ACOs have traditionally been clustered around big, institutional hospitals. More recently, it is the doctors’ groups that are forming the nucleus of the ACO, as ACOs seek to remain focused on the patient—a key to delivering quality. Under this model, local primary care doctors, who see their patients regularly and know the family intimately, are in a much better position to determine what is most appropriate for the patient.

Atrius Health, a collection of 7 community-based health groups serving more than 1 million adult and pediatric patients in eastern and central Massachusetts, takes its commitment to improving

the quality of care to heart—literally—as quality care “is at the heart of our mission,” the Atrius website promises.3

Atrius, a Pioneer ACO built on the initiative sponsored by Centers for Medicare & Medicaid Innovation Center, was selected as one of 32 healthcare providers for its ability to deliver “high quality, coordinated care,” according to Atrius’ website.

Medicare beneficiaries are not locked into a restricted list of providers as are Medicare Advantage patients, or like regular patients were with the managed care networks in the previous generation. Under the Pioneer ACO model, Medicare beneficiaries seeing doctors who participate in an ACO maintain the ability to see any doctor or healthcare provider, even as they continue to receive the full benefits of Medicare.4

Among the medical practices participating under the Atrius brand are 7 primary and multispecialty medical groups, and a hospice care group that delivers care to patients at home. Atrius’ model of delivering quality care was further cemented last year when South Shore Medical Center received the Level 3 Patient-Centered Medical Homes designation from the National Committee for Quality Assurance (NCQA).

Patient-centered models are designed to help patients maintain an ongoing relationship with the same doctor, who leads a team of healthcare experts at a single location, and who takes responsibility or ownership for care of a patient from beginning to end. The goal with medical homes is to reclaim the importance of the primary care doctor as the gatekeeper to deliver more personalized, coordinated, and efficient care.

Elevating the central role of primary care services instead of more expensive specialty services has been shown to cut hospitalization rates, lower rates of Medicare spending, and improve quality. 5

Quality and Payers

The 32 Pioneer ACO healthcare organizations were chosen by CMS to test different payment models and to spur competition to deliver higher quality and more affordable care than patients receive now under fee-for-service models.

All 32 ACOs in the program improved quality of care. On the cost side, while only 13 of the 32 ACOs were able to lower costs, the costs for the entire group of 669,000 beneficiaries in the Pioneer ACOs rose only 0.3% in 2012, less than the 0.8% increase for similar beneficiaries in 2012.6

The 13 ACOs produced a savings of nearly $88 million in 2012, partly due to fewer hospital admissions and readmissions, according to a recent study of the Pioneer ACO pilot.6 Two of the Pioneer ACOs ended up spending more on the beneficiaries than the Medicare feefor- service model.6

Of the 19 Pioneer ACOs that weren’t able to cut costs in the first year, 7 announced they would leave the Pioneer program for the Medicare Shared Savings Program model, and 2 more said they would leave the Medicare accountable care arena.6

Fee-for-service models have rewarded volume, not the quality of the health services rendered, and have been blamed for driving the cost of healthcare upward, even as there’s little evidence that the United States is healthier than nations that spend far less.

Under new payment schemes, hospitals and doctors, for instance, are being asked to take on more risk so that if procedures go awry and patients need to be readmitted, hospitals or doctors don’t get reimbursed. The incentive is to get it right the first time, and to penalize mistakes by not paying the bill when things go wrong.

Value-based purchasing, which encourages pay-for-performance, tilts the system in favor of the patient. “The idea is to stimulate the competition among the healthcare system and make health care accountable,” said. Jim Frazier, MD, system vice president for medical affairs with Norton Healthcare, an ACO serving Louisville, Kentucky, and southern Indiana. Norton is currently involved in a pilot reimbursement program with the health insurer Humana.

Payment redesign is being structured and recalibrated to take account of providers’ readiness to accept financial risk, with health plans, hospitals, and doctors collaborating among themselves to negotiate goals around quality and cost reduction.7

Risk-sharing among providers and payers, and bundled payments, are changing the way hospitals and doctors are reimbursed so that the healthcare system moves “from volume to value,” said Karen Ignagni, president and CEO of American Health Insurance Plans.8

“The challenge is that until the reimbursement (model) is changed, it makes it difficult to make it a true ACO,” Frazier said. Will ACOs and alternative health payment models be enough to control the rising cost of healthcare? The past 3 years have seen healthcare costs level off, but many experts point more to the weak economy as the primary reason, as opposed to structural change within the healthcare system.

Brenner says the nation is in the midst of a 30-year experiment in redefining how to deliver healthcare, and that to succeed at the individual level will mean patients will have to feel cared about and know exactly what happened, why things happened, and how they can prevent their ailments in the future.

For doctors and nurses, it will mean looking forward to taking care of patients and bonding with them every day, he says. At the macroeconomic level, it will mean offering better care at lower costs. The US healthcare system in still the most expensive in the world by far, and whether the nation achieves better quality by rearranging the provider side or the payment side of the delivery system, “we’ve got a long way to go,” said Brenner.1. Muhlenstein D, Crowshaw A, Merril T, et al. The accountable care paradigm: more than just managed care 2.0. Leavitt Partners. http:// Published February 2013. Accessed July 15, 2013.

2. Accessed July 16, 2013.

3. Atrius Health website., asp. Accessed July 15, 2013.

4. Sindell M. Our journey as a pioneer accountable care organization: overview of the pioneer ACO model. Published July 11, 2013. Accessed July 15, 2013.

5. Calsyn M, Oshima Lee E. Alternatives to fee-for-service payments in health care. Center for American Progress. http://www.americanprogress. org/wp-content/uploads/2012/09/ FeeforService4.pdf. Published September 2012. Accessed July 15, 2013.

6. Centers for Medicare & Medicaid Services. Database/Press-Releases/2013-Press-Releases- Items/2013-07-16.html. Published July 16, 2013. Accessed July 16, 2013.

7. Ignagni K. Health plan innovations in delivery system reforms [published online June 19, 2013]. Am J Manag Care.

8. Ignagni K. Video interview. http://www.ajmc .com/ajmc-tv/interviews/Karen-Ignagni- President-and-CEO-AHIP-/video interview. Accessed July 15, 2013.

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