Are ACO's the future?

[SoulinNeed]

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Going by the other thread I started about how the proposed SGR fix will tie payment updates to measure qualities (where medicare will measure you against other docs). However, you can avoid this, if you participate in an ACO or PCMH. I've been looking up a lot of info on ACO's, but none of it has any clear numbers, and to be fair, most are too early to tell. Despite this, ACO's are popping up all over the country with more than 100 between Medicare and various groups, and now different ACO's are being established with private insurers. Something must be appealing about these ACO's to hospital systems, if they're rushing to set them up, right? At the same time, hospitals are merging and buying up practices at the quickest pace ever. UnitedHealth recently announced that it would increase its ACO contracts to $50 Bil per year with various groups. There seems to be a big push by doctor groups to get away from fee for service, and I was just wondering what you all thought about this?

 

[type b pharmD]

Going by the other thread I started about how the proposed SGR fix will tie payment updates to measure qualities (where medicare will measure you against other docs). However, you can avoid this, if you participate in an ACO or PCMH. I've been looking up a lot of info on ACO's, but none of it has any clear numbers, and to be fair, most are too early to tell. Despite this, ACO's are popping up all over the country with more than 100 between Medicare and various groups, and now different ACO's are being established with private insurers. Something must be appealing about these ACO's to hospital systems, if they're rushing to set them up, right? At the same time, hospitals are merging and buying up practices at the quickest pace ever. UnitedHealth recently announced that it would increase its ACO contracts to $50 Bil per year with various groups. There seems to be a big push by doctor groups to get away from fee for service, and I was just wondering what you all thought about this?

It is going to be the future of medicine here in the US. I'm saying this coming from a background heavy in managed care and health care economics.

These large groups know what they are doing. Think of it as being similar to economies of scale / bulk buying. You need to have very large ancillary staff (such as a quality econ/outcomes research service, clinical pharm, case management , legal/political staff, etc) to benefit from the upcoming aco based reimbursement schemes.

It is highly likely in the next 10 or so years that reimbursement will be cut significantly to the extent that medium sized private practices, who profit at this point based on volume alone, will either have to fold or join a large group / managed care / ACO because being high volume won't be enough if you don't have the ancillary staff to hit the ebm/quality targets.

I've seen small practices that are so well run (ie they made the investment in high quality RN and electronic med records) that they can probably hit quality targets just by being great providers with good enough tools at their disposal to personally do the legwork. (Whether most drs will want to do this extra work to meet bundled/quality based pay goals, nobody knows yet)

But the fact of the matter centers around declining system-level reimbursement. When PPACA fully hits , and then when the fallout hits from the influx of new patients and vastly expanding elderly and sick people dramatically increasing national (ie cms) spend on services, there will be only one way for the country to survive in terms of health care dollars. One strategy at the moment is going to be incentivizing efficiencies of scale. As a hospital , if you aren't either in the top 20-30% of your peer group based on pt satisfaction and outcomes, your reimbursement is going way down in the future. . So obviously not every private practice for profit hosp/organization can do this.. rather than folding, they would rather join an umbrella organization who can either carry them or provide the necessary expert staff to bring them up to par, or exempt them.

Large groups are hurrying to do this because right now, it is looking like their last way out vs pay for performance / quality based reimbursement. They need to be able to hit the ground running so that they can survive.

Providers are facing several choices atm economically

1. Increase their effort or spending on managerial / QA .. either by dr's personally spending time doing this or by paying more staff... even if you succeed you either lose money or lose time.

2. Practice old-school style (ie keep head in the ground and try volume based) and either fold up shop or experience significant revenue drops + increased volume workload

3. Join managed care/ large group/ hmo/ aco. Upside is no new administrative spend or hassle + possible quality based salary increases. Downside is employee based practice and having to answer to non provider type admins

In the future , a much much higher percentage of docs will be salaried employees and this will benefit them because of not having to spend time on administrative / quality / political things. Of course overall payment will go down.. but if you can practice quality ebm you could come out ahead 10-20% or so.

Of course the option will be there to go old school and do your own thing.. but providers trying to win using the old model will either have to take some sizeable pay cuts due to poor "quality" or else increase their time spent on admin duties or hire more staff.


TLDR VERSION:
reimbursement is going to go way down on a per visit or per procedure basis. No way around it if healthcare is going to survive the next decades. Practices and providers who can meet quality/satisfaction/ebm targets can potentially stand to benefit and make more money. The easiest way to do it atm is by joining ACO/HMO .

Just my 2 cents. Not an MD.. but I have spent enough time with orgs like KP and insurers to know this is why every big player is doing this.

 

[SoulinNeed]

Fantastic post. Seriously. It also gives me some hope that salaries aren't going to go down (when adjusted for inflation, they likely will, but there's no way to avoid that imo), if doctors, hospitals, etc. can just play this right. I feel like major ACO's and hospital groups within them that are located in more rural areas will benefit more, because they'll be able to control their patients more and manage their care, while competition will be huge in cities.

 

[Arkangeloid]

Fantastic post. Seriously. It also gives me some hope that salaries aren't going to go down (when adjusted for inflation, they likely will, but there's no way to avoid that imo), if doctors, hospitals, etc. can just play this right. I feel like major ACO's and hospital groups within them that are located in more rural areas will benefit more, because they'll be able to control their patients more and manage their care, while competition will be huge in cities.

If the SGR fix bill thats in the House goes through, then salaries will still decline relative to inflation, but it could be much worse.

EDIT: I guess that the end of fee-for-service might spell doom for salaries anyways, but we shall see.

 

[SoulinNeed]

If the SGR fix bill thats in the House goes through, then salaries will still decline relative to inflation, but it could be much worse.

Yeah, I understand that. The worst case scenario would be it going down in absolute numbers. A $180K salary becoming $170K, without inflation.

I'm at least glad to see that so many hospital networks are working to stay ahead of the curve, instead of being caught off guard by reducing reimbursements. While ACO's aren't the solution for all, if they can get it right, it would be a better way of providing medicine (avoiding pure volume work), and improving salaries (even if it doesn't keep up totally with inflation).

 

[Kal EI]

We're going to be working for peanuts.

 

[type b pharmD]

Yeah, I understand that. The worst case scenario would be it going down in absolute numbers. A $180K salary becoming $170K, without inflation.

I'm at least glad to see that so many hospital networks are working to stay ahead of the curve, instead of being caught off guard by reducing reimbursements. While ACO's aren't the solution for all, if they can get it right, it would be a better way of providing medicine (avoiding pure volume work), and improving salaries (even if it doesn't keep up totally with inflation).

One way to look at ACOs and the future end of FFS is to take a look at the current hospital reimbursement climate. HCAHPs scores and core measures apply here. Also you can look at it from an insurers perspective (CMS "5 star" quality scale). These quality based reimbursement structures are in place now, and it is likely according to people i have spoken with (in the insurance industry, and hospital execs) that this type of scheme will eventually apply to individual providers and practices. As you guys have seen in the SGR bill, it is already basically being hinted at.

At the moment, with hospitals and insurers, you basically see the following.

For performers in the top 10-30% ... you get a 5-20% increase in payments... For those in the middle, no change .. for those in the bottom 40-50% .. they get a reduction in pay (not unlike the famous "No Child Left Behind" act). While this seems at face value to potentially jeopardize patient care (hurt organizations that are not providing top tier care), it is thought that it will eventually either force poor organizations out of business or force them to join (ie merge or sell) with organizations that can actually provide quality care.

The percentile tiers are a temporary measure (10-20 years) .. because in a few decades, we will obviously see many scam organizations (ie a good sized chunk of for-profit hospitals and insurers) disappear .. and then you will only have "high quality" orgs providing care in the market... it will be difficult for any organization to stand out .. and most will transition to the neutral status (no pay upgrades, no downgrades) ..

It is a little different for providers since they are more of clinical professionals rather than $ driven corporations. There would be significant blowback if the govt tries to put doctors out of business on an individual level, for example.

In the short term, it will incentivize doctors to either follow EBM and reduce their admissions/relapses/exacerbations/event rates by providing quality care .... or else force them to join an organization that has policies and procedures in place for enforcing such care (ie Kaiser Permanente, which basically will accept nothing less than being in the top 10% by paying for extremely large and dedicated ancillary staff, such as clinical pharmacists and nurses for doing counseling call, blood pressure check visits, etc). As a doctor in a large org like that, your pay will be based on internal quality guidelines which will reflect the legal climate the organization is experiencing. If a provider refuses this (one of those two things, ie increase quality or join a quality focused group).. they will see a 5-10+% outright pay decrease in the form of reimbursement decrease. Again this will really only apply to people who are trying to game the reimbursement system while concurrently providing poor quality care (ie "mills" ... practices that only do one or two procedures or interventions even when not indicated solely for the purposes of revenue generation)

Down the line, it is anyone's guess .. but the way I (and many folks that I have talked with) see it is , it is an incentivizing of a change in the way practice is delivered, and can't be seen only as a wrist-slap or govt controlled bonus system.

Doctors who adapt to provide "quality" instead of quantity will break even (or so.. based on the inflation adjustments) ...

Providers who exceed at actually providing high quality medicine (ie reducing their hosp admissions rates, mortality, making sure patients hit goals (ie being on standard core therapies or preventative measures)) will stand to get a 5-20% increase in pay..

And providers who continue with their present mindset of quantity over quality (ie volume based schemes) will probably see a 5-20% decrease in pay... it is their choice.

These changes will occur regardles of practice setting. Inside of organizations (ACO/HMO/Large group ie 100+ providers) .. these providers are getting salary bumps and bonus pay based on their performance vs the organization's goals, which you can bank on being aligned with CMS. In private practice.. it is not here quite yet, but you can see it being done on the hospital side of things (HCAPHS, bundled payments, core measures, never-events). It will come soon however (for private practice, think on the 10 year timeframe).

Another thing that is worrying everyone is ... what will they do if their patient population sucks (is non adherent, malignant, poor, poor health, what have you)? Will you be penalized ? The idea is that by joining large organizations, these costs and factors will be spread out over large geographical areas and practice settings. At this point, hospitals and health systems that have large percentages of these patients are getting bonus money to cover for it. That money (ie compensation for underinsured/ uninsured losses) is going to change... as evidenced by PPACA.. But certain programs (ie 340B based pharmacy pricing for orgs that perform a significant amount of charity care) are here to stay and will be expanded subject to restrictions after CMS and Uncle Sam evaluate just what is going on with these orgs. (For uninformed , 340B is a program where hospitals and hospital affiliated outpatient practices can be reimbursed enormous markups on drugs -- ie 500-5000% if they provide a specified amount of free drugs to uninsured) . Programs like this can serve as a significant way to feed money back into the organization at the end of the budget year. These will likely be tweaked based on the fallout from PPACA et al.

Practices in metro areas will likely 'compete' for the 'best' patients.. you already witness it with insurers .. (medicare advantage plans offering informational meetings for prospective members at times and locations that select for healthy patients, ie, requiring stair climbing or holding meetings at specific times) .. If you can compete successfully, you are likely running a lean and mean private practice and are already providing pretty decent care.. If you can't .. then you will have to settle for being at the median if you play your cards right ... If your practice really does suck or have bad patients, you will either have to join an organization that knows the political/reimbursement particulars for these types of patient (ie knows how to get the extra money), or experience a salary decrease.

It is not going to be all bad for providers... Some good, some bad. For hospitals and insurers, there is definitely going to be significant hurt .. which is intended to try to shape up a ****ty system.

The one thing to remember for new providers is that EBM is really where all of this is heading. Which is as it should be , really (imho) , and it's where it is already at in countries with socialized medicine.

 

[SoulinNeed]

Thank you for your informative posts. We, as medical students, can only speculate and hope on what is going to happen when we get out of residency. Personally, I think I'm just going to end up with a group, simply because the salary situation seems to be a lot better, and the pressure on private practices are making it too hard to survive. All we've been told over the past few years is to expect major salary cuts, so when I see something like ACO's that provide an opportunity to reverse that trend, it's very welcoming. The salaries may not keep up with general inflation, but at least they're increasing. However, that will depend upon the organization that you joined. From my quick research, it seems like most costly expenditures that harm quality measures have less to do with the individual doctor, and more to do with the organization around them, and how well it treats patients. At the very least, the merging of hospital networks and practice groups will strengthen negotiating power. At the end of the day, we're all trying to provide quality patient care and keep up good paying salaries at the same time. We'll take anything that can help quell the "doom and gloom" scenario we've been all here hearing for years, lol.

 

[type b pharmD]

Thank you for your informative posts. We, as medical students, can only speculate and hope on what is going to happen when we get out of residency. Personally, I think I'm just going to end up with a group, simply because the salary situation seems to be a lot better, and the pressure on private practices are making it too hard to survive. All we've been told over the past few years is to expect major salary cuts, so when I see something like ACO's that provide an opportunity to reverse that trend, it's very welcoming. The salaries may not keep up with general inflation, but at least they're increasing. However, that will depend upon the organization that you joined. From my quick research, it seems like most costly expenditures that harm quality measures have less to do with the individual doctor, and more to do with the organization around them, and how well it treats patients. At the very least, the merging of hospital networks and practice groups will strengthen negotiating power. At the end of the day, we're all trying to provide quality patient care and keep up good paying salaries at the same time. We'll take anything that can help quell the "doom and gloom" scenario we've been all here hearing for years, lol.

Thanks for reading. Not too many med students probably get the time to get into these subjects. I definitely am not a magic future predictor either.. but I consider it fortunate to have had the opportunity for a bunch of exposure in electives and externships and I am a sometimes political junkie. Just saying don't take my word for it.. look around and critically analyze the political snd economic data from a physician perspective.

I also must addend the idea that I don't have much idea or view on drg/icd9 related changes. I don't know if it can be more than speculated on when it comes to which interventions would be cut or increased . You guys probably have a better feel on that.. I would think primary care and IM subspecialtirs though will be the first to see quality based reimbursement in general

Again only my 2 cents. This is just a hobby and I am by no means an expert.. but they are probably all around you so do get involved in this stuff if you get a chance

 

[SoulinNeed]

Thanks for reading. Not too many med students probably get the time to get into these subjects. I definitely am not a magic future predictor either.. but I consider it fortunate to have had the opportunity for a bunch of exposure in electives and externships and I am a sometimes political junkie. Just saying don't take my word for it.. look around and critically analyze the political snd economic data from a physician perspective.

I also must addend the idea that I don't have much idea or view on drg/icd9 related changes. I don't know if it can be more than speculated on when it comes to which interventions would be cut or increased . You guys probably have a better feel on that.. I would think primary care and IM subspecialtirs though will be the first to see quality based reimbursement in general

Again only my 2 cents. This is just a hobby and I am by no means an expert.. but they are probably all around you so do get involved in this stuff if you get a chance

Yeah, it's just amazing when you see so many things pop up in relation to ACO's. For instance, new liability insurance, such as this: http://www.dailyfinance.com/2013/07/23/allied-world-bermuda-launches-liability-coverage-f/ and I have no idea what it's about, lol.

 

[rocketbooster]

What's your take on who will actually serve as the ACO?

I have heard and seen 2 different ACO entities:

1. The hospital wants to serve as the ACO and is buying up as many practices as possible. They originally give the physician a higher salary to incentivize him/her to join the hospital but then slowly decrease the salary. The physician basically loses their autonomy and becomes a hospital employee no longer deciding on what time you come in each day, vacation days, etc.

2. Physician groups do not want to be owned by the hospitals since they want to maintain their autonomy and reimbursement. Therefore, many groups of different specialties are coming together to form their own ACO so they still have control and hospitals have to follow along since they rely on the physicians.

I think #1 is happening more in bigger cities while #2 is happening, or at least can happen, in smaller suburban cities. Have you heard anything on this topic?

 

[Dires]

The thought of being an employee is the worst part of all of this, IMO.

 

[SoulinNeed]

What's your take on who will actually serve as the ACO?

I have heard and seen 2 different ACO entities:

1. The hospital wants to serve as the ACO and is buying up as many practices as possible. They originally give the physician a higher salary to incentivize him/her to join the hospital but then slowly decrease the salary. The physician basically loses their autonomy and becomes a hospital employee no longer deciding on what time you come in each day, vacation days, etc.

2. Physician groups do not want to be owned by the hospitals since they want to maintain their autonomy and reimbursement. Therefore, many groups of different specialties are coming together to form their own ACO so they still have control and hospitals have to follow along since they rely on the physicians.

I think #1 is happening more in bigger cities while #2 is happening, or at least can happen, in smaller suburban cities. Have you heard anything on this topic?

Salary is an issue. However, the increasing demand for physicians and their low supplies should help stabilize that. These large groups will likely compete with each other to get doctors on board. I'm just speculating here.

 

[USCTrojan11]

While in an ideal system, this ACO shift sounds dandy, as a nation we're forgetting how this places physicians who work for the underserved against the wall. Quality measures are great in practices where excess occurs but in underserved/underpriveledged areas the patient population features far more co-morbidities that all need to be managed. In the Kaiser model, repeat visits for the same previous preventable conditions (DKAs, malignant htn, hypoglycemic episodes, meth exacerbation of CHF) result in penalties since it falls on the physician to provide education and counseling. it fails to regard how SES factors into the non-compliance that lead to these episodes in these patients.

In beverly hills, there is no need for a full time case worker/social worker in the clinic. In a 3 doctor practice in south central LA, 3 cw/sws struggle to handle the patient load. The drs that choose to work with these populations are now forced to employ even more ancillary staff in an effort to marginally improve outcomes to not face the heavy penalties. In essence, drs who make the conscious decision to work with the people who need healthcare the most face an even steeper uphill battle just to stay afloat. It's evident in the fact that Kaiser has taken over most of the city of LA but has no resources anywhere near SPA6 (the most underserved area)

 

[syoung]

Plus in models like Kaiser, correct me if I'm wrong, but don't they push patients through 10-15 min at a time? How do you have time to even listen to the patient, let alone counsel/educate/inform them???

If in those hospitals, you DO have more time with them, then... definitely take that time.

 

[SoulinNeed]

Plus in models like Kaiser, correct me if I'm wrong, but don't they push patients through 10-15 min at a time? How do you have time to even listen to the patient, let alone counsel/educate/inform them???

If in those hospitals, you DO have more time with them, then... definitely take that time.

Do you mean that the Kaiser ACO model pushes patients at you every 10-15 minutes?

 

[sazerac]

More and more doctors are leaving the traditional insurance-based fee for service model, but they are transitioning into the other kind of ACO:

Accepts Cash Only