By John Jenrette, MD, Chair of the Board, California Association of Physician Groups
CEO, Sharp Community Medical Group

Last month at the third National ACO Congress held in Los Angeles, California, national experts presented up-to-date information about the evolution of Accountable Care Organizations throughout the United States, including the Pioneer and Shared Savings ACOs sponsored by the Centers for Medicare and Medicaid Services (CMS) and commercial payer ACO products. The discussions were focused on five overarching principles or themes that underlie successful ACO evolution and health care reform: payment reform, clinical integration, patient engagement and activation, partnerships and collaboration, and new delivery models.

Payment reform is the movement away from paying for volume to paying for value, i.e., transitioning from the traditional fee-for-service payment model to global payments, bundled payment mechanisms or increasing upside and downside risk on shared saving programs. While it is widely accepted that payment reform is necessary to curb America’s health care expenditures, what has been less discussed is how difficult it actually is to appropriately align incentives among all of the players. As discussed at the Congress, aligning incentives continues to be a challenge even for the formal Medicare ACOs.  Mai Pham, M.D., Director of ACO Programs at the Center for Medicare and Medicaid Innovation, freely admitted that determining appropriate physician-specific incentives was a laggard issue for Pioneer ACOs. Conveners also discussed financial risk,  incentives that would control out-of-network costs, reversing the hospital mentality of “heads in beds,” and acceptance in the healthcare delivery system for tiered and narrow networks. The main takeaway from those discussions is that provider engagement is perhaps the most important component to payment reform. It is not enough that the payment system be changed; physicians and hospitals must commit to the change.  Providers must agree to the new systems and embrace being paid for value rather than volume.

Perhaps less controversial, but no less important, is the need for clinical integration to ensure ACO success in terms of improving the quality of care our system provides. Provider organizations, health systems and payers must work collectively and collaboratively to coordinate care for patients. Case studies presented at the Congress highlighted the importance of information technology and clinical decision support as enablers of clinical integration. However, the culture of an organization, the importance of smooth handoffs of care, effective shared decision-making and the value of population health management were also frequently emphasized as components required in true clinically integrated system that will result in improved health outcomes and quality.

Comprehensive health reform will not take place without the involvement of patients. At the conference, Steve Shortell, PhD, University of California at Berkeley, described an interesting concept regarding patient engagement and activation. He described how patients need to “co-produce” their care and health outcomes much like how college students must study, work, and be equally responsible for their education. Patient engagement and activation is no easy task.  As providers, we must partner with patients, understand the role of consumerism, and provide transparency around our services both in terms of quality and cost. Patient engagement and activation also requires having the right tools, not only technologically but also “human resource” tools, for example,  making good use of social workers, nursing staff, pharmacy staff, community health support (such as promotores, Spanish-language  community promoters), and county health services personnel.

The fourth theme of the conference focused on partnerships and collaborations. Throughout the session discussions, it was commonly believed that partnerships are necessary to bring the appropriate tools, infrastructure, and capabilities to the table in order to move us all in the right direction for the future.  The partnerships under discussion included the expected relationships and ventures between health plans, hospitals, and physician groups but they also included a look at some unlikely “bedfellows” — partnerships that had not been considered in the past, such as the Optum/Monarch collaboration as well as the HealthCare Partners and Davita venture. The one common thread across all of the collaborations is that each partnership developed at a local level.  What may fit in one community may not fit in another, so understanding your local market well is critical for a successful collaboration.

Of course, new partnerships, clinical integration, patient engagement strategies, and payment reform experiments are all being tested in or are forming the basis of new care delivery models. Care management and coordination is generally accepted as the key to ending the costly, fragmented, and unnecessary care that is still so common in our country. The outstanding question is: what is the best way to effectively coordinate care to achieve the desired outcomes of health reform? What model is the best? The answer still eludes us, but in addition to analyzing the status of the 152 CMS ACOs that have been piloted across the country, the conference sessions presented a variety of delivery model possibilities — including limited networks, approaches to develop and sustain primary care, the redesign of care processes and the use of “alternate site providers,” where services can be provided in community and home environments instead of more costly institutional settings.

In summary, the overall consensus among the Congress conveners was that “the train has left the station.” There is no doubt that we are heading down the track toward drastic changes in our healthcare delivery system. The political outcomes of the election may not materially alter this course, and although the process is hampered by the various degrees of sophistication of provider organizations, hospitals, and other providers, it is important for all of us to learn and work together to collectively move the nation’s healthcare system in the right direction

Excerpted from the January 2013 edition of CAPG Health, published by the California Association of Physician Groups.