Medicare ACOs: Coming Soon to a Healthcare Provider Near You

Beth Fitzgerald | January 24, 2012 | Health Care
Some of New Jersey's largest healthcare providers are starting to assemble Medicare accountable care organizations

Medicare accountable care organizations — which promise to transform the way medical services are delivered and medical professionals are compensated — are taking shape across New Jersey, as several major healthcare providers either ramp up their own ACOs or give the idea serious scrutiny.

Atlantic Health System, the parent of Morristown, Overlook, and Newton Medical Centers, said Monday that it has applied to Medicare to launch an ACO in April, in partnership with Ridgewood’s Valley Hospital. Hackensack University Medical Center has applied as well. Robert Wood Johnson University Hospital in New Brunswick said it is evaluating its ACO options, as is UMDNJ-University Hospital in Newark.

AtlantiCare health system in southern Jersey is creating an ACO that will enroll its own employees, and patients covered by commercial insurance plans. It hasn’t applied to Medicare.

But whether or not healthcare providers seek Medicare ACO status, experts see a strong movement toward revamping healthcare along ACO principles in an effort to rein in soaring spending.

Essentially, an ACO makes it possible for doctors to work in concert to coordinate care — following up on treatments and medication, for example, or making sure that a patient visits a specialist. The goal is to avoid unnecessary care, such as expensive emergency room visits, and to improve outcomes, both of which help reduce healthcare costs.

Under the Medicare model, established by the Federal Affordable Care Act, the government program shares a portion of the savings with the healthcare providers, a process known as gain sharing.

“An ACO is an organization of physicians who have gotten together in order to provide the highest-quality primary care at the lowest costs — or at least to save as much money as is possible within this environment,” said Dr. Morey Menacker Paramus physician and president of the Hackensack University Medical System ACO.

Hackensack has decided to initially limit its ACO to about 120 physicians, all primary care doctors, and between 15,000 and 20,000 Medicare patients.

Menacker is signing up doctors who either have already been designated as medical homes, which are required to meet certain standards for coordinating patient care, or who “understand the concept that the care of the patients doesn’t start when they walk in the door and end when they walk out the door, but is comprehensive and continuous 365 days a years.”

Audrey Meyers, president and chief executive officer of Valley Hospital, which is partnering with the Atlantic ACO to form its Bergen County Regional Division, shares Menacker’s vision.

The organization “will bring together four hospitals, hundreds of doctors, home healthcare agencies, and skilled nursing facilities in a way never done before in New Jersey. Working together to provide coordinated, high-quality care helps ensure that patients get the right care at the right time, while avoiding unnecessary duplication of services.”

Dr. David J. Shulkin, president of Morristown Medical Center and vice president of Atlantic Health System, is the administrator of the Atlantic ACO, which has enrolled more than 1,200 physicians in Sussex, Morris, Union, Somerset, and Bergen counties, and which is expected to enroll an estimated 50,000 Medicare patients.

Despite their current enthusiastic reception, however, the evolution of the Medicare ACO has not been altogether smooth. The federal Center for Medicare and Medicaid Services came under fire in the past year for regulations considered either too cumbersome or too financially risky to healthcare providers. But the final rules issued by the CMS in October alleviated many of these fears, according to Dr. Peter W. Carmel, president of the American Medical Association.

Carmel, who is chair emeritus of the Department of Neurological Surgery at UMDNJ-New Jersey Medical School, wrote in a recent blog post that the final regulations helped doctors by not requiring them to share in the financial risk; the original rules could have required healthcare providers to repay CMS if the savings to the government failed to materialize.

Carmel also indicated that CMS also eased the regulations by dropping the requirement that 50 percent of the doctors in an ACO had to be using electronic medical records.

That may sound like a contradiction in terms. The essence of an ACO is the ability to share clinical data among providers. How is that possible without EMR?

Shulkin explains: “When you don’t have everybody using electronic records, you don’t have all the clinical data [in digital form]. So that is going to require that we have some manual data collection on the clinical side. But we have begun to start using technology that will allow us to capture that information as well. We just won’t be mandating that everybody put everything into electronic medical records.”

Meanwhile, the Atlantic ACO will encourage the doctors to go digital. “Many of our doctors are moving toward EMR, and we’re obviously supportive of that,” Shulkin said. “We have a program where we help doctors with a subsidy, and we help them technically.”

Shulkin said he forged ahead with the ACO — despite his own misgivings about the early CMS regulations — because “there is no derailing the direction that the healthcare community needs to go in. We have to start participating as active members of the community to find solutions to reduce the cost of healthcare and to improve the quality of care. It is going to take such a long time to turn around this ocean liner . . . that we needed to make the commitment to participate in a big way.”

Ultimately, Shulkin said, “The federal government took the feedback from the provider community seriously and made significant improvements to the program to make it more attractive to join.”

“We could have been in a situation under the first set of rules,” said Shulkin, “where we put into place lots of important strategies to reduce healthcare costs. Then there could have been an epidemic of flu, and healthcare costs could have gone up, and we could have had to pay the federal government a large amount of money.” By limiting the downside risk, the ACO also limits its potential gains, “but our primary reason for participating in this is because we want to start finding new ways to do a better job of what we’re doing, not make more money at this.”

Shulkin said the current health care system, “pays you for admitting people to the hospitals and doing tests and procedures. The accountable care organization actually turns that financial incentive on its head and says ‘if you can keep people well and healthy and actually help keep them out of the hospital, and avoid tests that may not be necessary, and find a better way to provide care, there is actually an incentive to help you financially to replace the income you would have gotten if the patient had been sick or in the hospital. So it actually makes more sense.”

The U.S. healthcare system is broken, not just because costs are rising at an alarming rate, but because it can’t be relied on to make sure patients get the appropriate care, Shulkin said.

The experience will be a new one for patients, who will see that “the doctor taking care of them actually knows about what care they are getting from other doctors and also knows what care they’re not getting from the healthcare system.”

So-called gaps in care, care that patients should be receiving, but aren’t getting for whatever reason, will be targeted by the ACO, which will employ nurse case managers to follow up with patients, and use technology to track whether patients are getting the needed care.

Success will require getting more patients engaged in their own care, Shulkin said.

“You need patients to be willing to accept a certain amount of accountability for their own healthcare and well being,” Shulkin added. “The patient and the family need to participate as members of the team and interact and ask questions and make sure they understand what they have to do to keep out of the hospital and stay healthy. That is not easy, and I don’t think the healthcare system has done a good job of making it easy for patients.”