Robert L. Johannessen
Corporate Communications Director, eQHealth Solutions
In an earlier posting this year, my former colleague, Laurie Robinson, RN, mused that ACOs are bound to fail unless they fundamentally improve quality. She suggested this can be accomplished via a robust care coordination component.
Although she is correct about care coordination being a key ingredient for a successful accountable care organization, recent studies suggest it will take more than superior quality to make an ACO financially viable. For example, a recently published simulation found that ACOs will need to incorporate organizational efficiencies, and not just improve clinical outcomes, if they are to succeed.
The research was conducted by David M. Eddy and Roshan Shah who used a simulation model to analyze the effects of the Shared Savings Program quality measures and performance targets on Medicare costs in a simulated population of patients ages 65–75 with type 2 diabetes.
In the abstract, they wrote, “We found that a 10-percentage-point improvement in performance on diabetes quality measures would reduce Medicare costs only by up to about one percent. After the costs of performance improvement, such as additional tests or visits, are accounted for, the savings would decrease or become cost increases. To achieve greater savings, ACOs will have to lower costs by other means, such as through improved use of information technology and care coordination.”
Another researcher, M. Alexandra Johnson, FACHE, has written that ACOs might be at risk for financial loss if they are unable to completely document and properly code all diagnoses and associated co-morbidities. In her experience, it is rare that proper documentation occurs more than 10% of the time.
Johnson says the risk is that ACOs are agreeing to deliver care to Medicare beneficiaries at a cost that is at least two percent less than the CMS benchmark. But, by not having a history of proper documentation, the benchmark will be set too low, thus making it a “mathematical impossibility” to demonstrate savings.
Providers would be remiss not to look at Eddy and Shah’s research and at Dr. Johnson’s experience. Although this is sobering news, I would argue this makes it a necessity for ACOs to build a structurally sound organization that makes clinical quality and organizational efficiencies as equal partners.
Can this be done? Yes, but it will take much more than a few committed providers getting together with a great plan to offer better care.
The reality of forging something as complex as an ACO will be challenging and will require a wide range of talents and experience, including certain skill sets that are not usually present within most groups of providers. Thus, ensuring the success of any newly formed ACO may necessitate forming partnerships throughout the care community.
Partners need to be found who can obtain marketing capital, organize provider networks, manage data with advanced health care analytics, incorporate complex clinical algorithms to stratify patients by risk, process and handle claims and, of course, implement a state-of-the-art care coordination program. Skimping on any of these components will create a weak link and invite failure.