1. Accountable Care Organizations
Larry J. Witmer, D.O.
Associate Family Medicine Director
UH Richmond Medical Center
Family Physician
UHMP Twinsburg Family Medicine

2. Objectives
 The Patient Protection and
Affordable Care Act
 Define Accountable Care Organizations (ACOs)
 Differentiate ACOs from Payment Reforms
 Guiding Reform Principles
 How does an ACO work?
 Key Features
 Potential Problems
 Legal Concerns

3. The Patient Protection and
Affordable Care Act
 Section 3022 of the Patient Protection and Affordable Care
Act (PPACA) creates the Medicare Shared Savings program, allowing
ACOs to contract with Medicare by January 2012.
 According to the PPACA, the Medicare Shared Savings program,
"promotes accountability for a patient population and coordinates items
and services under part A and B, and encourages investment in
infrastructure and redesigned care processes for high quality and
efficient service delivery".

4. The Patient Protection and
Affordable Care Act
 The ACO shall be willing to become accountable for the quality, cost, and
overall care of the Medicare fee-for-service beneficiaries assigned to it
 The ACO shall enter into an agreement with the government to participate in
the program for not less than a 3-year period
 The ACO shall have a formal legal structure that would allow the
organization to receive and distribute payments for shared savings to
participating providers of services and suppliers
 The ACO shall include primary care ACO professionals that are sufficient for
the number of Medicare fee-for-service beneficiaries assigned to the ACO
under subsection

5. The Patient Protection and
Affordable Care Act
 At a minimum, the ACO shall have at least 5,000 such beneficiaries assigned
to it in order to be eligible to participate in the ACO program
 The ACO shall provide the government with such information regarding
ACO professionals participating in the ACO as the government determines
necessary to support the assignment of Medicare fee-for-service beneficiaries
to an ACO, the implementation of quality and other reporting requirements
under paragraph (3), and the determination of payments for shared savings
under subsection (d)(2)
 The ACO shall have in place a leadership and management structure that
includes clinical and administrative systems

6. The Patient Protection and
Affordable Care Act
 The ACO shall define processes to promote evidence-based medicine and patient
engagement, report on quality and cost measures, and coordinate care, such as
through the use of telehealth, remote patient monitoring, and other such
enabling technologies
 The ACO shall demonstrate to the government that it meets patient-
centeredness criteria specified by the government , such as the use of patient and
caregiver assessments or the use of individualized care plans
 The ACO participant cannot participate in other Medicare shared savings
programs
 The ACO entity is responsible for distributing savings to participating entities
 The ACO must have a process for evaluating the health needs of the population
it serves

7. Accountable Care Organization

8. Accountable Care Organization
 An Accountable Care Organization is a type of
payment and delivery reform model that seeks
to tie provider reimbursements to quality
measures and reductions in the total cost of
care for an assigned population of patients
 A group of coordinated health care
providers form an ACO, and would then
provide care to a group of patients
 TV analogy

9. Accountable Care Organization
 The ACO may use a range of different
payment models (capitation, fee-for-
service with asymmetric or symmetric
shared savings, etc.).
 The ACO is accountable to the patients
and the third-party payer for the
quality, appropriateness, and efficiency
of the health care provided.

10. Accountable Care Organization
 According to the Centers for Medicare
and Medicaid Services (CMS), an ACO is
"an organization of health care providers
that agrees to be accountable for the
quality, cost, and overall care of Medicare
beneficiaries who are enrolled in the
traditional fee-for-service program who
are assigned to it.“
 Estimate of 78 million Americans on
Medicare in 2030

11. Accountable Care Organization
 The phrase ACO is attributed to Dr. Elliot
Fisher of Dartmouth Medical School.
 Dr. Fisher has led the Dartmouth Atlas Project
— a project that has, for the last 30 years,
documented the variation in care across the
United States.
 The Dartmouth Atlas has focused on both the
quality of health care as well as its cost.

12. Increased Cost doesn’t equal better Care
 More importantly, they have reported on the
relationship between the two, and their findings are
nothing short of an indictment of our current
paradigm
 Specifically, their findings illustrate that there exists
wide variations in the cost of care across the
country, and profoundly, that the regions that spend
more per patient do not necessarily obtain better
outcomes.

13. Different than Payment Reforms
 Term ACO “grew out of an exchange between physician colleagues in
which they were trying to determine a proper “locus for shared
accountability” for a patient’s health care
 HMO’s and other health insurers are obvious candidates, but as Dr.
Fisher noted, HMOs only comprise a small percentage of the current
market, and health plans in general have focused on negotiating
favorable prices within relatively open networks of providers
 The “medical home” (also referred to as a Patient Centered Medical
Home) is another candidate, but is taken out of the running by Dr.
Fisher because of the untested nature of medical homes, and their
requirement of new payment mechanisms

14. Reforming Provider Payment
 Health care reform for those without insurance
 Gaps in quality
 Rising health care costs
 Variations in healthcare spending bear little correlation to
quality
 US system doesn’t reward higher-value care
 Some areas, we spend 3x more on Medicare patients than
others and no quality difference
 Preventative services underused
 Proven therapies for chronic disease not used
 Medical errors and safety concerns (EMRs not mainstream)

15. Reforming Provider Payment
 Promote high-volume and high-intensity care
regardless of quality
 Does not support innovative approaches to
coordinating care or preventing avoidable
complications or services

16. Guiding Reforming Principles
 Local accountability
 Continuity of care is extremely important and
requires coordination of multiple healthcare
professionals
 Healthcare system must facilitate and encourage
coordination
 Flexibility
 Variation of strategies based on practice types must
be put in the place which will allow improvement
in care

17. Guiding Reforming Principles
 Value
 Payment system needs to be shifted
 Must reward improved care at lower cost, not volume
 Encourage collaboration and shared responsibility among providers
 Consistent set of incentives must be offered to providers
 ACOs wouldn't do away with fee for service but would create savings
incentives by offering bonuses when providers keep costs down and
meet specific quality benchmarks, focusing on prevention and carefully
managing patients with chronic diseases. In other words, providers
would get paid more for keeping their patients healthy and out of the
hospital.

18. Guiding Reforming Principles
 Transparency
 Measures of overall quality, cost, and general performance
 Consumers can make informed decisions with providers and services
 Consumers’ confidence may increase if they have some say in their
decision-making
 Payment reforms already in place
 Bundled payments
 Disease management
 Pay-for-performance

19. How Does ACO Work?
 Establishes a spending benchmark based on expected spending
 If an ACO can improve quality while slowing spending growth, it receives shared
savings from the payers
 Greater reimbursement to providers with coordination of services, wellness
programs, using less resources
 Shared savings is incentive for ACOs to avoid expansion of healthcare capacity
that often drive increased costs
 Medical Home with PCP as driver of care-lower spending growth, presumably
better care
 Organizations and providers alike need to be willing to collaborate their care in a
structured framework to allow this to work such as organizations in the city like
University Hospitals and CCF

20. How Does ACO Work?
Different than HMO in that patient not required to stay in network
 ACOs aim to replicate "the performance of an HMO" in holding down
the cost of care
 Avoiding the structural features that give the HMO control over
[patient] referral patterns

21. ACOs Key Features
 Local Accountability
 collaborations between primary care and
specialty physicians, hospitalist, and nursing
home care (to name a few)

22. ACOs Key Features
 Shared Savings
 Specific expenditure benchmarks based on historical trends
and adjusted for patient mix
 Contingent on meeting designated quality thresholds
 If you spend less, you receive more
 Reinvest money saved for medical homes, slow down
healthcare costs
 Federal health officials predicted that the government would
pay $800 million in such shared savings to providers in the
next three years.
 Even after these payments, they said, Medicare would save
$510 million, and its savings could be as much as $960 million
over three years.

23. ACOs Key Features
 Performance Measurement
 Quality of care provided based on
meaningful outcome and patient experience
data

24. ACOs: Laying the Foundation
to be Successful
 Engagement of key local stakeholders
including insurance providers, purchasers,
and patients
 History of successful innovation and reform
with respect to health IT adoption and clinical
innovations
 Structural foundation in place at the outset
 Incentivizing medical students to enter into
primary care
 55,000-200,000 primary care shortage by 2020

25. ACOs: Laying the Foundation
to be Successful
Some degree of integration within the
healthcare delivery system including
primary care and specialists
Agreement and process in place for
distributing shared savings for providers

26. ACOs: Key Design Components
 Organization of the ACO needs to be well-defined
 Scope of ACO has to include primary care providers as
the gatekeepers
 Spending and benchmarks must be projected
accurately based on historical data in order to provide
confidence that savings can be achieved
 Distribution of shared savings must be negotiated and
distributed appropriately

27. ACOs: What Can Go Wrong?
Hospital mergers and consolidation leaving
fewer independent hospitals and physicians
Greater market share can lead to leverage with
negotiations with insurers, ultimately driving
healthcare costs up again

28. ACOs: Legal Concerns
 Concern of antitrust and anti-fraud laws
 Limit market power the drives up prices and stifles
competition
 If an ACO becomes so large, they would employ the
majority of providers in a particular region
 US Justice Department Antitrust Division promises an
expedited antitrust review process for these new
doctor-hospital partnerships that controlled more
than 50% of the local market

29. Conclusions
 ACOs are coming and soon!
 Reimbursement is going to slide while demands will be
higher
 Not enough primary care physicians to handle load
 Cost doesn’t equal care according to studies
 May decrease autonomy for private and even employed
physicians
 Pressures to “dot the I’s and cross the T’s” will be higher than
ever

30. Question 1:
What does ACO stand for in this lecture?
1. Accountable Care Organization
2. Animal Control Officer
3. Academy of Clinical Oncology
4. Administrative Compliance Order
25% 25% 25% 25%
Correct answer
is… 1
10
1 2 3 4
Countdown

31. Question 2:
What are some key features of the ACO?
1. Local Accountability
2. Shared Savings
3. Performance Measures
4. All of the above
25% 25% 25% 25%
Correct answer
is… 4
10
1 2 3 4
Countdown

32. Question 3:
What is the official date in which ACOs can
contract with Medicare?
1. January 2011
2. January 2012
3. January 2013
4. January 2014
25% 25% 25% 25%
Correct answer
is… 2
10
1 2 3 4
Countdown

33. Question 4:
What is the minimum length of time in which the
ACO has to maintain its contract with Medicare?
1. 1 year
2. 2 years
3. 3 years
4. 4 years
25% 25% 25% 25%
Correct answer
is… 3
10
1 2 3 4
Countdown

34. References
 "Medicare "Accountable Care Organizations" Shared Savings Program - New Section 1899 of Title
XVIII, Preliminary Questions & Answers". Centers for Medicare and Medicaid Services. Retrieved
January 10, 2010.
 http://www.healthreformwatch.com/2010/03/11/a-guide-to-accountable-care-organizations-and-
their-role-in-the-senates-health-reform-bill/
 Fisher ES, Shortell SM (2010). "Accountable Care Organizations: Accountable for What, to Whom,
and How". JAMA 304 (15): 1715–1716. doi:10.1001/jama.2010.1513. PMID 20959584.
 Gold, Jenny (Jan 18, 2011). “Accountable Care Organizations, Explained”. Kaiser Health News:
http://www.npr.org/2011/04/01/132937232/accountable-care-organizations-explained.
 Pear, Robert (March 31, 2011). “Standards Set for Joint Ventures to Improve Health Care”. NY
Times: http://www.nytimes.com/2011/04/01/health/policy/01health.html