Quality Over Quantity: Accountable care organizations link physician payments to hospital outcomes

The Mayo Clinic is technically one. So are Pennsylvania’s Geisinger Health System, California-based Kaiser Permanente, and the Cleveland Clinic. Beyond the handful of long-established and well-integrated sites being labeled as de facto accountable care organizations (ACOs), advocates are seizing the moment and pushing for a bold vision of what role ACOs will play in the movement to reform the health care payment system across the country. In at least two major pilot projects in the works, hospitalists are expected to be front and center in leading the transition.

An ACO is an agreed-upon group of providers who band together to assume joint responsibility for both the quality and cost of health care for a specific population of beneficiaries. “What an ACO is trying to do is defragment health care,” says Mark Werner, MD, chief medical officer for southwest Virginia’s Carilion Clinic. As long as the group meets defined quality benchmarks, its providers can share in any financial rewards that spring from cost savings. But the providers also share in the collective risk of penalties for poor performance. Using the buzzwords of the moment, an “alignment of incentives” could help “bend the curve” of the sharp upturn in health care delivery costs.

ACO advocates argue that by pushing quantity over quality, the current fee-for-service payment system actually punishes providers that coordinate care or promote greater efficiencies; policy analysts are nearly unanimous in decreeing that the current model is fundamentally broken and must be replaced. “Well, actually, it’s not broken,” says Alfred Tallia, MD, MPH, professor and chair of the department of family medicine at the Robert Wood Johnson Medical School in New Brunswick, N.J. “It’s working very well for delivering what we’ve got now, which is not what we need, unfortunately.”

What an ACO is trying to do is defragment health care.
— Mark Werner, MD

Perfect Timing

The current push for health care reform offers the opportunity to make the case for a more equitable, outcome-oriented payment system as a necessary component of any structure that emerges. Many reform advocates in Massachusetts already have moved from asking how to provide more health care coverage to asking how the government can afford it, and ACOs have become a favored mechanism for controlling costs.

The general ACO concept has been backed by the nonpartisan Medicare Payment Advisory Commission, and received another boost when the Accountable Care Promotion Act, initially co-sponsored by Rep. Peter Welch (D-Vt.) and Rep. Earl Pomeroy (D-N.D.) in May, was incorporated in its entirety into the health care reform bill introduced in the House of Representatives. The bill would launch a pilot program for ACOs for Medicare beneficiaries, while similar provisions within the Senate health care reform bill would set up pilot projects for both Medicare beneficiaries and pediatric beneficiaries of Medicaid or the Children’s Health Insurance Program.