Is the success of physician-led ACOs sustainable?

For Lerla Joseph, MD, participating in an accountable care organization (ACO) was a way to stay independent and handle
increasing government regulations. 

Further reading: Physicians must harness their power to ensure independence

The Richmond, Virginia-based internist started organizational efforts to form an ACO in 2012. By December 2015, the ACO had government approval for Central Virginia Coalition of Healthcare Providers, representing 38 physicians and six midlevels, all from small, independent practices. 

“As a small practice, we’ve been challenged by many things in terms of electronic health records (EHRs), regulations and managing quality metrics,” says Joseph. Although doctors in her area were increasingly deciding to become employees of hospitals or large groups, she had no interest in leaving private practice, because she felt she could better serve her community by remaining independent.

Last year was the physician-led group’s first for reporting quality data to the
Centers for Medicare & Medicaid Services (CMS) and Joseph is optimistic about the pending results and how the organization can improve healthcare for the patients and their providers. 

“Having now worked in the ACO environment, I can tell you there is a lot of creativity and a lot of ingenuity going on,” says Joseph. “I think this will benefit not only our clinicians, but our patients and healthcare in general.”

ACOs have become a popular option for physicians who, like Joseph, want to remain independent but need help with the increasing administrative burden stemming primarily from the Medicare Access and CHIP Reauthorization Act (MACRA) and its requisite quality data reporting.

There are three types of ACOs: physician-led, hospital led and hybrids, which include both physicians and hospitals. Experts say physician-led ACOs continue to show promising results, provide a means for doctors to maintain control and are viable for small groups. The strength-in-numbers approach helps physicians not only navigate government regulations, but enables them to pool resources to pay for technology to increase efficiency while providing quality care.

Here’s what physicians need to know about ACOs.

Performance of physician-led ACOs

Joseph and her ACO colleagues have reason to be optimistic about their long-term performance on quality measures, because in general, research shows that physician-led ACOs outperform those led by hospitals. 

A study published in the New England Journal of Medicine, as well as one from consulting firm KPMG, found that ACOs led by independent primary care groups typically saw greater savings compared with hospital-led ACOs. 

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Physician-led ACOs have several advantages over those led by hospitals, says Sue Feldman, RN, Ph.D., an associate professor at the University of Alabama at Birmingham who conducts research on ACOs. “Physician-led groups can shop around for services, including shopping for diagnostics, specialists or post-acute care that a hospital cannot do,” says Feldman. “If a hospital gets revenue from performing a diagnostic test, it’s hard for that hospital to negotiate with itself. Physician-led ACOs are not bound to one center and can look for a better price.”

One of the biggest areas of savings for an ACO lies in reducing emergency department and hospital admissions, which are both revenue-generators for hospitals. “It’s tough for a hospital to tell its physicians to use its emergency department and hospital less,” says Matthew Bates, MPH, senior leader with Studer Group, a healthcare consulting firm.

Physician-led ACOs tend to be smaller and have fewer layers of bureaucracy than hospital-led groups, allowing them to quickly identify and respond to problems. For example, MD Value Care, a physician-led ACO in Glen Allen, Virginia, after determining that it needed better transitional care, created a program wherein care coordinators call recently-discharged patients to schedule follow-up appointments and review medications.

Next: Helping with MACRA

The ACO’s cardio group created an urgent heart clinic to address patients who need quick attention, but don’t need the emergency department to address common chest-pain complaints that otherwise would send a patient to the emergency department.

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“We sit down with representatives from all our groups and identify where the holes in care are and how we can fill them,” says Ken Zelenak, MD, a primary care physician and the ACO’s medical director.

Joseph’s group focuses on sharing information between primary care and specialty groups so everyone knows a patient’s status. Another area of emphasis has been getting Medicare patients in for their annual wellness visits, which drives revenue and improves outcomes, including reduced
hospital admissions.

How physician-led ACOs can help with MACRA

ACOs have shown an ability to reduce hospital admissions and healthcare spending, which is why Congress specified ACOs to be part of MACRA and why CMS has given them a prominent role in achieving its overall goals, says Tim Gronniger, deputy chief of staff at the agency.

“They allow a practice to focus on taking care of patients overall and focus on what’s important to their population rather than micromanaging a select set of quality measures,” says Gronniger. “They focus on keeping people out of the hospital that don’t need to go.

“The ACO model is geared so that if the clinician delivers better care, the patient feels better, it saves money and the clinician shares in that savings,” Gronninger adds. 

ACOs are the biggest piece of MACRA’s Advanced Alternative Payment Model (APM) payment incentive track, and Gronniger says he expects them to keep growing. As physicians provide more feedback, he expects more models to be developed to address identified shortcomings.

While CMS doesn’t distinguish between physician-led and hospital-led ACOs for APM purposes, the greater the savings, the bigger the payout to the ACO. Thus, the better track record to date of physician-led groups bodes well for their success under MACRA.

ACOs are one of the only payment models that have cut costs, says Bates. “Are they working every time? No. But I don’t know of any better models to bet on as far as outcomes,” he says. 

Physician-led groups are now the majority of ACOs, and their number is expected to grow, says Clif Gaus, chief executive officer of the National Association of ACOs. “They win on both cost and quality, and I think that’s why CMS as well as Congressional stakeholders continue to support the program. We believe the new administration is embracing ACOs as a major alternative payment model and will actually lessen some of the regulatory barriers to entry in the market,” he says.

Independence through ACOs

Physicians increasingly feel as though
patient care decisions are being taken out of their hands, and ACOs are one way they are preserving their independence when it comes to caring for patients. 

 “If you are a physician today, you feel like a lot of the time insurance companies and others are telling you how to treat patients with all their approval processes,” says Bates. “If I’m part of an ACO, I sit down with my fellow physicians and make my own rules.”

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A physician-led ACO offers the advantage of not having to answer to hospitals or health systems as part of the process, allowing the physicians to determine for themselves what guidelines they want to establish for treatment of certain conditions.

“Each group has its own EHR and makes its own decisions on how to run the practice and how to see patients,” says Zelenak about his ACO. “I feel like we, the physicians, are in control. We are all in the same boat facing the same challenges and work together to get solutions.”

Joseph says her ACO helps provide the resources the member practices need to stay independent. The organization uses group contracting to get better pricing for supplies and provides consultants to help practices better understand how to increase revenue and handle quality reporting.

ACOs have many quality reporting requirements, and for doctors who have never done any form of quality reporting, the transition can be jarring.

Next: What does the future hold?

“Physicians who have been doing their own thing for a while are mostly ill prepared for the level of documentation required for an ACO,” says Feldman. Quality measures are going to happen whether they want them or not, because private payers are also moving toward value-based care, she adds. But one of the advantages of the ACO is providing the support, both in technology and instruction, to get through the reporting process.

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The future of physician-led ACOs

Experts agree that ACOs are here to stay and that physician-led groups will most likely drive their growth. Doctors can expect to see further refinements in how groups operate and even new ACO models from CMS, which Gronniger notes is listening to physicians on how to tailor them better for small groups.

“The ACO program has evolved in the last five years, and all the changes have been based on feedback,” says Gronniger. That information resulted in moving from six ACO models for the MACRA proposed rule to 10 for 2018, and he expects the number and type to keep changing as more information from the field is reported.

As ACOs mature and learn from each other, shifts in thinking will occur, including on the patient side. “Physicians get an incentive to be part of an ACO, but patients don’t get an incentive for what physicians are asking of them,” says Feldman. “A rogue patient that smokes and eats whatever they want and doesn’t care about BMI or blood sugar basically ties the physician’s hands when it comes to quality measures.” So until patients have a monetary stake in their health, ACOs will be unable to maximize their results. 

Bates agrees, saying that patient engagement is the biggest area of potential savings growth. With data showing that most prescriptions never get filled or are not taken as directed, figuring out how to improve patient adherence is becoming very important to improving quality outcomes and reducing hospital admissions.

“An ACO is one of the strategies to try to be efficient and improve outcomes,” says Joseph. “I see ACOs as a continuing, viable option in terms of delivery. If we maximize the health dollars we spend, it is beneficial for the patient, the economy and the country. We have to change the way we have been practicing medicine.”