Speaker 1: Welcome to Value-Based Care, Healthcare Delivery. This is Lecture B, Accountable Care Organizations. This lecture will provide an overview of Accountable Care Organizations. The objectives for this lecture, Accountable Care Organizations, are to describe Accountable Care Organizations, ACOs, identify the various types of public and private sector ACOs, describe the concept of shared savings, and discuss what ACOs need in order to be successful. As you can see from the definition on the screen, an Accountable Care Organization, or ACO, is a group of providers that are jointly responsible for the healthcare spending and quality of a particular population of patients. ACOs are a result of innovations included in the Affordable Care Act. ACOs are responsible for providing high-quality coordinated care to patients, while sharing care delivery and financial responsibility for a defined patient group. In 2015, there were 400 ACOs serving 7.2 million beneficiaries. The concept of an ACO is a move toward a system that pays healthcare providers based on the quality, rather than the quantity, of care provided to patients. There are different types of ACOs, and the early performance of the ACOs has been mixed. We will begin by identifying key features of ACOs. There are six key features of ACOs. First, ACOs are organized and led by groups of doctors and hospitals in a particular community. This means that both the activities of providing care and the accountability for the quality and costs of that care are located in that community. This local accountability is by design because the hospitals and physicians in a community will know what that population needs and will also know how to organize care appropriately. Second, ACOs are new organizations that must have the capacity to identify, in advance, the population served and determine what resources will be needed to improve their health and meet their medical needs. These resources will include things like doctor's visits, hospital stays, home care, lab tests, and many others. This is different from the way care is currently provided and paid for in many areas. Typically, care is provided and payment is provided after that care, without any prospective budget and resource planning across types of providers. Third, ACOs must be able to measure and report on quality and spending measures. In addition, ACOs will need to use performance data to improve the care that is provided and to meet spending targets. These capabilities will require information technology and systems that may not be in use today. A fourth key feature of the ACO model is the ability to plan for and coordinate patient care across different settings, from hospital to doctor's office to home care to social service providers. For example, when an ACO patient is discharged from the hospital, where will follow-up care be provided and who will manage the multiple activities that occur? Similarly, how will the complex care, behavior change, nutrition, and other needs be coordinated for a patient with multiple chronic conditions, such as diabetes? Thinking about, and being accountable for, care across the continuum will require ACOs to think differently and use technology in new ways. Fifth, the ACO approach assumes that financial incentives will be designed and implemented in new ways. Currently, most physician providers and hospitals continue to receive more money when more care is provided. There are few examples of payment incentives that reward quality of care and coordination of care. Finally, ACOs will need to openly share information with providers, with those who pay, and with consumers, so that care can be improved. This enhanced transparency will create new opportunities and challenges for information technology and other resources. ACOs were created in the public sector, through federal legislation, and mainly for Medicare patients. There are multiple public sector ACO programs, including those in Medicare and Medicaid. There are also ACOs that serve those with private health insurance, referred to as commercial ACOs. Beginning in 2012, the Affordable Care Act established the Medicare Shared Savings Program, or MSSP, to encourage the development of ACOs. In this model, ACOs that meet quality benchmarks and keep spending below budget will share in the savings they achieve with the federal government, the Centers for Medicare and Medicaid Services. As of 2016, there were 434 ACOs participating in the MSSP, using two different financial risk approaches. The Medicare Pioneer ACO program was launched for providers that were ready to test more advanced payment models. This program is much smaller than the MSSP, and was considered appropriate only for the most advanced ACOs. This program began with 32 ACOs, using six slightly different financial incentive designs. Medicare also launched a demonstration project to provide federal funds to support the development of ACOs by smaller organizations. This was called the Advanced Payment ACO program, and originally supported 20 programs. In 2016, the Centers for Medicare and Medicaid Services announced the Next Generation ACO model that built on the experience of the Pioneer ACO program and allows ACOs to prospectively set benchmarks and for patients to choose to be in an ACO in advance. This program includes specific incentives for patients and for telehealth and care coordination activities. In February 2016, there were 21 ACOs in the Next Generation ACO program. Finally, a few states are currently developing and adopting ACO models in their Medicaid programs. This includes, for example, Oregon, Iowa, Vermont, and Colorado. Medicaid ACOs use a variety of approaches and are too new to evaluate fully. Similar to the public sector, private sector ACO initiatives are also underway. Some of the ACOs formed to serve Medicare patients are also contracting with private insurance companies. Still, other commercial insurance firms are developing ACO models. In general, private sector ACOs have the same goals as public sector ACOs, but they are not necessarily held to the same requirements regarding financial and quality performance. The private sector ACO activity is highly variable and has been difficult to track and evaluate. So, what types of organizations can form an ACO? There are at least five types of organizations that can form an ACO. Integrated Delivery Systems, Multispecialty Physician Practices, Physician Hospital Organizations, or PHOs, Independent Practice Associations, or IPAs, and Virtual Physician Organizations. We will next describe the characteristics of each of these types of organizations, in particular, the areas that might be helpful for success as an ACO. Integrated Delivery Systems are organizations that own hospitals, physician practices, and sometimes insurance companies and other services, such as home health care and post-acute care hospitals. These organizations were typically begun by hospitals and hospital systems. They are already working to align financial incentives. Some Integrated Delivery Systems have invested heavily in electronic health records, other information technology, and extensive training to support team-based care. For these and other reasons, Integrated Delivery Systems, such as Kaiser Permanente, seem particularly well-suited for forming an ACO.

Speaker 2: The next three types of organizations that can form an ACO involve physician practices more centrally

Speaker 1: than many Integrated Delivery Systems. For example, large multispecialty group practices, like the Cleveland Clinic, have a history of physician leadership. Some have already developed mechanisms for coordinating clinical care, and some own or have strong affiliations with physicians. Physician hospital organizations combine hospitals and physicians who are not employed by the hospital to negotiate contracts and manage various clinical care components. Some of these, such as Advocate Health in the Chicago area, have begun to reorganize care to be more cost-effective and focus on quality and value-added care. These relationships and experience provide a strong foundation for building an ACO. Independent practice associations were formed by physician practices that remain independent but jointly contract with health plans. Some of these, such as Atrius Health in Massachusetts, have been very active in redesigning physician practices for improving quality and enhanced focus on patients. These types of organizations, in one way or another, are physician-led and have a strong potential for successful ACO development. The final type of organization that can form an ACO is a virtual organization,

Speaker 2: that is, a group of people who work in a virtual environment.

Speaker 1: is a virtual organization, that is, small independent physician practices joined together through contracts to form a new organization. They are often located in rural areas and could be driven by individual physicians, local medical foundations, or even the state Medicaid agency, such as the Community Care of North Carolina. These types of organizations are particularly important for ACOs in rural areas and provide some structure, leadership, infrastructure, and resources to otherwise small and often under-resourced physician practices.

Speaker 2: Next, we will discuss how ACOs work.

Speaker 1: ACOs bring together a group of providers, as shown in the figure. For example, hospitals, primary care physicians, specialists, nursing homes, and other providers. These organizations come together and agree to report and share data on quality metrics and financial performance. In an ACO, these providers jointly set benchmark levels of performance and target levels of spending, or costs. Then, the ACO members together must meet benchmark levels of performance and keep the total cost of care below the target level. An important part of the ACO approach involves the financial aspect and the ability to share savings. We will use the figure on this slide to describe this in greater detail. ACOs first establish a projected spending level for a defined set of patients. In the figure, this is shown by the red line. In the simplest approach, the projected spending is determined based on historical spending. The ACO also sets a benchmark or target level of spending, the green line in the figure. This is expected to be realized when the ACO providers come together and improve care provision, improve access to care, coordinate better, reduce unnecessary care, improve the health of patients, and other activities. After time goes by, ACOs report the actual level of spending they achieved, the blue line. In the above figure, the actual spending, blue line, is below the benchmark or target spending, green line. And the difference between actual and target is the savings that can be shared between the ACO and the federal government, in the case of Medicare. In addition to the spending or cost part of the ACO model, there are also specific requirements regarding the quality of care provided in the ACO. In order to share in the savings achieved as described in the last slide, ACOs must also set benchmark levels of quality care performance. This includes things like patient experience, patient safety, care coordination, delivery of preventive care, and control of chronic conditions. In order to share savings, the ACO must set benchmark levels of quality and meet or exceed those benchmark levels. They need to report these benchmarks and their performances, and they need to keep costs below a targeted level. The various ACO programs and models are organized to put different levels of risk on the ACO. Most typically, the ACO arrangement is one-sided, meaning that ACOs share in the savings produced, but not the potential losses. In this case, they get additional payments from Medicare to reflect the savings achieved by the ACO model. If the spending does not exceed the target, the ACOs are not at risk for the difference. The more advanced ACO programs include two-sided, or full financial risk. In these approaches, if spending targets are not met, the ACO must share in the financial loss incurred. Some ACO executives describe this as writing a check to Medicare. Many providers are not experienced in taking on this level of financial risk. The American Hospital Association identified ten things that ACOs will need to succeed. First, as we have been describing, ACOs involve new ways of working and new relationships that must be formed among a wide variety of organizations and patients. This work will require strong leaders who understand the ACO approach and will work to build trusting partnerships. The ACO approach, by definition, will require a culture of teamwork, as different clinicians, patient navigators, care coordinators, data analysts, and information technology experts come together to improve and coordinate care and report financial and quality performance. ACOs will need to develop a culture of teamwork, and many will need to invest in training and other team-building efforts. ACOs involve a variety of providers. Some of these providers may have very little experience working together. In some cases, they may have perceived each other as competitors in the past. ACOs will need to develop strong and trusting relationships. ACOs will also require new financial capabilities in order to succeed. Some ACOs are formed by organizations with very little experience managing the financial risk. They also may not have the ability to receive payments and then distribute them. These functions are associated with the insurance or payer aspects of the ACO approach and involve knowledge, technology, and leadership. To successfully improve care and reduce spending, ACOs also need new types of resources, including, for example, expertise in patient education and support, especially for those with complex and chronic conditions. Some ACOs have little experience in population management and care coordination and will need to hire and train a new workforce to do this in their communities. Finally, information technology will be needed to monitor and report on quality metrics and to support quality improvement activities. To summarize, it is becoming increasingly apparent that the provision of high-quality care involves coordinated longitudinal care, and that means accountability and performance assessment at the individual provider level is no longer sufficient, especially when gaps in care are the result of poor coordination of care. Individual providers often don't have the capital resources to invest, nor do they have enough responsibility for the whole patient to look at the big picture with regard to technology investment within the entire system. By connecting physicians to a larger group, they may be better able to connect and coordinate on behalf of their patients.

Speaker 2: Now that we know what ACOs are supposed to do,

Speaker 1: what health information technology can help them get there? For sure, they will need enhanced health information exchange, electronic health records, patient registries, and practice management tools, as well as targeted use of clinical decision support to promote quality improvement. In addition, a data warehouse that can link the clinical and financial data will be useful to aid the reporting functions.

Speaker 2: As described above, the ACO approach depends on very specific and powerful information technology,

Speaker 1: including systems such as data warehouses that can collect and centralize quality and financial performance for routine reporting. To achieve care improvement and cost savings, ACOs will need to use complex population management programs, that will rely on the ability to find, stratify, and track the most complex patients. This is based on the fact that in most ACOs, the most complex 20% of the patients will use about 50% or more of the spending. ACOs will also need electronic health record systems that can be integrated across settings, and have advanced clinical decision support applications to work with advanced clinical and care coordination processes. In addition to new ways of collecting and reporting information,

Speaker 2: ACOs will need new care management processes

Speaker 1: that will involve people and information technology. For example, the ACOs will need to be able to provide For example, the robust management of diverse patients is something many ACOs will need to develop and deploy. The staff to do this work includes nurses, social workers, disease managers, patient navigators, and potentially new health care workers that will emerge as ACOs develop. Many ACOs are not equipped for aggressive outreach and communication with their patients, and, finally, population management programs will need to be tailored for specific community needs. For example, supporting patients after a hospital discharge may be very different in a rural community versus an urban or suburban one. These activities will potentially create new approaches to care, to care coordination, and complex disease management. This concludes Lecture B, Accountable Care Organizations. In summary, an ACO is a group of providers that are jointly responsible for the health care spending and quality of a particular population of patients. There are multiple types of public and private sector ACOs. Some of the most common public sector ACOs are Medicare Shared Savings Program, Pioneer, and Next Generation programs. ACOs must set and meet target performance levels for quality of care and spending. If they meet their targets, they can share savings with the government or private payers. ACOs will require new care and care management programs and information technologies.

Speaker 2: For more information, visit www.fema.gov