Nearly everyone agrees it’s difficult to sustain a health-care system that depends on rewarding doctors for prescribing treatments and tests — whether or not they help patients.
Enter accountable care organizations (ACOs), a model that seeks to fundamentally revamp the system so doctors are paid instead for keeping patients healthy and costs down.
On Thursday, insurance giant Aetna announced ACO-like arrangements with Providence-Swedish Health Alliance, The Polyclinic, Rainier Health Network and Pacific Medical Centers (PacMed) to offer health care around Puget Sound.
Next month, some 30,000 Boeing employees and retirees will have the option of signing up for health care from one of two new ACOs, UW Medicine Accountable Care Network or Providence-Swedish Health Alliance. The deals are among the first ACO-employer agreements in the nation and, as such, are being closely watched.
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Also, the state and King County government are seeking ACO agreements with providers to cover Medicaid enrollees and government employees.
ACOs are cropping up across Washington, with many big names jumping into the game. But there’s doubt as to whether ACOs can shift American health care to a system where success and financial compensation are linked to patient health. The organizations are expensive to launch, requiring big investments in technology and an overhaul of patient management.
“The major challenge is the execution and implementation” of ACOs, said Stephen Shortell, professor of health policy and management at the School of Public Health at the University of California, Berkeley. The question that still needs to be answered is: “How [can] you bring the ACO concept to scale?”
More than 20 million Americans are getting health care through an ACO or similar organization. In Washington, there are at least 16 ACO and ACO-like groups treating Medicare and privately insured patients, according to Leavitt Partners, a national health-care consulting firm.
The idea has been evolving over the past three decades, but the 2010 Affordable Care Act helped catapult the terminology into the mainstream.
In this managed-care model, doctors, clinics and hospitals come together to form an ACO. The providers craft contracts with insurance companies, Medicare or Medicaid, or even large employers. In these deals, they set cost and quality goals, with the financial risk of unnecessary costs generally falling to the doctors. As to the rewards, they are shared between the provider and whomever the provider has partnered with.
Since 2009, The Polyclinic has been part of an ACO-like shared-savings program with Premera Blue Cross. In the first two years of the program, the Seattle-based provider group earned $1.5 million in bonuses for meeting cost and quality targets, and the program has grown to cover more than 10,000 Polyclinic patients. (Polyclinic officials would not disclose bonus amounts for more recent years.)
In the Aetna plans announced Thursday, Polyclinic, Providence-Swedish Health Alliance, PacMed and Rainier Health Network (a Tacoma-based alliance including CHI Franciscan Health and Northwest Physicians Network) would provide ACO-like networks that will each offer health care through Aetna plans beginning next year. The deal will be available through certain Puget Sound employers.
“Our new Aetna Whole Health product is intended to provide our members with better health-care experiences and outcomes, while helping employers manage health-care costs,” said Norm Seabrooks, Aetna’s president for Washington, in a news release issued Thursday.
During the summer, Alan May, Boeing’s vice president for human resources, announced the company’s ACO agreements, touting the direct partnership between an employer and providers as having “national implications.”
For now the deal is limited to Puget Sound-area employees and their families, but that could change. “Boeing does intend to extend this service-delivery approach to other regions in the coming years,” May said at the June announcement.
The ACO-employer model “will continue to grow,” predicted David Muhlestein, director of research with Leavitt Partners, “but be limited to the really big employers.”
As much as an ACO can change how providers and insurers approach health care, for many patients the difference in care may not even be noticeable.
“At least in the early stages of this thing, it may not look very different at all,” said Bob Perna, director of Health Care Economics & Practice Support at the Washington State Medical Association. “For patients, this may be a fairly invisible exercise that goes on.”
Some of the ACOs are emphasizing better service, including longer clinic hours and improved digital communications. But some of the most important changes are happening behind the scenes.
The goal is for providers to more closely track their patients, making sure they’re getting vaccines and health screenings, following prescriptions, pursuing healthier lifestyles, and getting follow-up care if needed. A case manager or primary care provider coordinates a patient’s doctors and treatment.
This approach, the thinking goes, should help to avoid unnecessary trips to emergency rooms, hospital readmissions and other costly, preventable services. Additionally, the cost goals should deter doctors from prescribing superfluous tests and treatments. On the other hand, ACOs discourage their doctors from shortchanging patients on services they really need by rewarding doctors with bonuses only if they meet quality goals.
“We could all use a lot less care than we get,” said Dr. Jeff Harris, who leads the University of Washington’s Health Promotion Research Center. “The challenge is figuring out which care we don’t need.”
The majority of ACOs were formed to serve Medicare patients, and The Polyclinic created Washington’s first Medicare-partnered ACO in 2012. The organization serves 7,700 patients in Medicare’s Shared Savings Program, an initiative to encourage the use of ACOs and to reduce costs for the federal health-care program
Participants in Medicare’s ACO program must track dozens of quality measures including patient safety; preventive health; coordination of health care; patient experience, such as access to specialists; and management of “at-risk populations,” including those with diabetes or high blood pressure.
Only one-quarter of the 243 Medicare ACOs participating in Shared Savings and a second, smaller program earned bonuses this year, totaling $445 million, according to the federal Centers for Medicare & Medicaid Services. Polyclinic was not among them.
Polyclinic submitted its quality data, but was already so cost-efficient that it’s proving difficult to bring those numbers down further, said Dr. Michelle Matin, Polyclinic’s associate medical director of quality. She said the clinic is happy with its performance, even if it didn’t get the bonus this time.
The Medicare ACO program offered “a good testing ground. It was about trying to look ahead and see what we can do to keep getting better,” Matin said. This is “where things are really going. We need to do this.”
While many experts view ACOs and similar models as promising, there are many challenges, particularly for smaller and rural medical providers.
ACOs require significant investments in technology. Providers need to internally track patients and their care, as well as measure, compile and report quality results to insurance companies or Medicare. Plus, providers need the staff to manage and coordinate patient care, while the metrics for making sure people are getting the services they want and need are evolving.
A survey of ACOs participating in the Medicare program found startup costs of $2 million on average for the first year.
The approach taken by Kirkland-based EvergreenHealth Partners could be a model for independent providers who want to participate but don’t have the resources to build the necessary infrastructure. In this ACO-like organization, doctors and small clinics can join the group and work toward quality and cost goals while still practicing on their own.
Many organizations are still experimenting with the approach, and it will take a few years to know whether ACOs will be embraced widely.
The ACO’s most important effect on health care isn’t the financial arrangements, said Muhlestein, of Leavitt Partners.
Instead, the focus should be “on changing the physicians’ behavior,” he said. “The real change is how they manage the (patient) population.”
Lisa Stiffler, a freelance writer in Seattle, can be reached at firstname.lastname@example.org. This story was produced through a partnership with Kaiser Health News, an editorially independent part of the Kaiser Family Foundation.