Your New Neighbor

Accountable Care Organizations Take Hold in Texas 

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Cover Story – July 2013 

Tex Med. 2013;109(7):18-25.

 By Amy Lynn Sorrel 
Associate Editor 

The health system reform law Congress passed in 2010 seemingly established a new breed of health care delivery called an accountable care organization (ACO). But the concept of holding those who provide the care responsible for controlling costs while simultaneously improving quality – with financial risks and rewards – is not entirely new, says Houston family physician Patrick M. Carter, MD.

In fact, his multispecialty physician group practice, Kelsey-Seybold Clinic, has done it for years. Only this year was it formally recognized as the first – and so far only – ACO accredited by the National Committee for Quality Assurance (NCQA).

While there is no single definition of an ACO, it is loosely defined as a network of physicians, hospitals, or some combination that takes financial and clinical responsibility for a set population of patients and coordinates all of their care. In other words, instead of just selling the parts, an ACO sells the car. And payment would align with those goals, doing away with a compartmentalized fee-for-service system.

Over the years, there have been attempts at controlling costs and ensuring quality, albeit unsuccessful ones. Managed care and insurance companies couldn't do it, Medicare couldn't do it, and hospitals can't do it alone – without a physician network.

ACOs may be a new attempt to solve an old problem. But that void, says Dr. Carter, gives physicians an opportunity to take the lead as the model takes off in Texas and across the country.

"Most of the focus thus far has been on the cost side," said Dr. Carter, medical director for care coordination and quality improvement for Kelsey-Seybold. "But physicians have the most direct influence over the utilization, cost, and quality of care," which he says puts doctors in the driver's seat.

Texas has more than two dozen ACOs, according to a February analysis by the health care consulting firm Leavitt Partners.

And the latest federal figures show more physicians lead Medicare ACOs than do hospitals. The last round of ACO approvals by the Centers for Medicare & Medicaid Services (CMS) earlier this year bumped the number of physician-led groups to 202, compared with 189 for hospital-led organizations. That's a reversal from a year ago, when hospitals headed up 91 ACOs, compared with 45 led by physicians.

Physician interest is growing, too: Medscape's 2013 Physician Compensation Report showed 24 percent of the nation's physicians are either in an ACO or plan to join one. In Texas, 22 percent of physicians say they are discussing or considering joining other health care providers to form an ACO, according to the Texas Medical Association's 2012 Physician Survey. Of those, 72 percent are discussing the move with other doctors.

Physician leaders acknowledge that the models take a fair amount of infrastructure and adaptation to work, and an ACO may not suit every doctor or community.

Still, the Patient Protection and Affordable Care Act's focus on accountable care appears to be making an impact, at least in the short term. That, coupled with employers' and government and private health plans' appetite for value-based care, could mean more of these models will move into the neighborhood with a role for physicians to play.

On the one hand, physicians can look at an ACO as one way of reorganizing to meet market demands for value-based care, TMA Vice President for Medical Economics Lee Spangler, JD, told physicians at an ACO symposium hosted by TMA and the Travis County Medical Society in February to help physicians navigate the evolving health care environment.

On the other hand, he warns, with no regulation on use of the term "ACO," physicians considering the move also must carefully evaluate, "Is this a new organization trying to do new things to deliver the right care at the right time? Or is it something old in new clothing?"

TMA does not endorse participation in an ACO or any other postreform program. The association encourages physicians to be wary, to be informed, and to take the time to learn about these systems, understand their differences, and consider what they can mean to their practice and their patients.

Tools for Innovation 

While there is no guarantee the ACO experiment won't amount to a managed care redux, physician leaders highlight some distinctions from the 1990s phenomenon.

For one, physicians must sign up for an ACO; with managed care, it was patients signing up for HMOs.

"In this case, the doctors are making the commitment, and they are more involved in the management," said Fort Worth internist Stuart Pickell, MD, of North Texas Specialty Physicians (NTSP). He chairs the Medical Management Committee for a Medicare Pioneer ACO his independent practice association (IPA) formed with the Texas Health Resources (THR) hospital system in North Texas.

"In the HMO model, the contract was between a patient and a company that was trying to manage the doctor. Now, the contract is between the doctor and the ACO who work collaboratively to manage risk by integrating care management, improving quality, increasing patient-centeredness, and reducing redundancies," he said.

Nor are ACOs necessarily closed networks like HMOs were, which means less bureaucracy and more control for physicians. Instead of simply limiting care and costs through prior authorizations, for example, which makes it difficult for physicians to access the care their patients need, accountable care emphasizes quality-based and efficiency-based measures to drive performance.

"You can order an MRI when you want. But at the end of the day, your utilization is compared with doctors in similar situations, and you can start to make decisions based on more transparent data," said Gregory S. Sheff, MD. He is president and chief medical officer of the Seton Health Alliance, another Medicare Pioneer ACO jointly formed by the Seton Healthcare Family hospital system and his independent multispecialty clinic, Austin Regional Clinic (ARC).

Physician leaders also say that unlike earlier managed care models, ACOs have the broader goal of managing a population's health across the continuum of care and creating the infrastructure to accomplish that.

Thomas W. Knight, MD, of Houston, a member of NCQA's ACO Review Oversight Committee, notes that the accountable care movement coincides with an overall shift toward "a patient-centered world, and we have to refocus our system around that." He adds that ACOs are no longer "theory," with at least 10 percent of U.S. citizens under the care of such organizations.

Medicare, private payers, and accrediting organizations like NCQA have differing versions of what it takes to be an ACO. Nevertheless, Dr. Knight says the models do require certain components, including:  

  • A legal structure that allows participants to function together, whether as a physician-only or physician-hospital organization;
  • A physician network that can manage primary care, in particular, but also complex cases, acute episodes, and transitions of care;
  • The infrastructure to manage cases and measure outcomes across the continuum of care;
  • Health information technology; and
  • A patient experience survey tool.           

Moving away from a purely fee-for-service payment system also is a core tenet of accountable care, which means physicians and hospitals likely will have to trade some near-term revenue for long-term rewards.

That shift doesn't necessarily mean getting rid of fee-for-service all at once. But, physician leaders say, ACOs have to find a way to work in incentives to control costs and improve quality.

"That's not going to work in a strict fee-for-service environment" that relies on utilization for revenue, says Dr. Carter, a member of TMA's Council on Legislation. "There is no CPT code for avoiding an admission. But this is a model that rewards cost-effective care."

Kelsey-Seybold uses a capitation arrangement and receives a set per-member, per-month payment from commercial payers to cover those patients' care, from soup to nuts. It can use savings to improve quality or patient experience or to help compensate physicians for practicing cost-effective, evidence-based care. The group follows a similar model for the Medicare Advantage health plan it operates.

As the ACO, Kelsey-Seybold is responsible for monitoring and directing all patient care, Dr. Carter explains. The physician-only organization does not include a hospital. But it does coordinate with multiple facilities in Houston and contract with affiliated subspecialists, such as pediatric subspecialists, who are not a part of the physician group.

Kelsey-Seybold also uses an electronic medical record system, a set of quality metrics, and a disease management program to not only track cost and quality outcomes, but to also keep patients engaged.

"We do a fair amount of outreach to remind patients when they are due for health maintenance, and prior to the idea of accountable care, most people felt that it was the health plans' responsibility to notify the doctor or patient," Dr. Carter said. "When it's the physician's office, it works so much better because our physicians and disease management team have a much closer relationship with the patients."  

 Texas Experiments With ACOs 

Several other ACO experiments with different structures and payment mechanisms are under way in Texas.

The Seton Health Alliance is a Pioneer Medicare ACO. Physicians are paid initially under a shared-savings-and-losses arrangement based on performance benchmarks and later under a population-based payment model of set monthly, per-beneficiary payments, or other approved alternatives.

Federal health reform regulations lay out specific parameters for these ACOs that require, among other things:  

  • Three years of participation;
  • A minimum of 15,000 fee-for-service Medicare patients;
  • Adherence to a set of 33 predetermined quality measures;
  • An open network, meaning patients are not required to seek care in the ACO; and
  • Patient assignment based on where patients get most of their primary care services.           

By contrast, the Medicare Shared Savings Program model requires only 5,000 patients and gives participants the option of a shared-savings-only track or a shared-savings-and-losses approach with higher rewards.

The Seton Alliance is a physician-hospital joint venture, but the structure is physician-led by design, says Dr. Sheff, who is also ARC's medical director of care management and clinical integration.

Physicians make up more than half of the governing board, which includes representation from three blocks, each with veto power: ARC, Seton Healthcare, and a third block of community physicians and a patient representative.

Hospitals certainly have a lot to offer in terms of providing many of the resources to help get an ACO up and running, and "no one entity can do this alone," Dr. Sheff told Texas Medicine. "But physician leadership keeps the emphasis on patient care and brings the content knowledge of how care actually works and how care works in a given community."

That community aspect is another reason the Seton Alliance is not exclusive to ARC or Seton physicians, he added. Nor are physicians in the ACO beholden to any one hospital facility. Because an ACO is responsible for managing a certain population of patients, the primary care relationship also provides an important link.

Wherever the project takes them, Dr. Sheff says it will be a launchpad for transforming how care is delivered at ARC, and the group is pursuing commercial ACO contracts with other primary care physicians and specialists.

"Our intent is to truly build an integrated network and make a functional delivery system out of the inherent groups that are already here," he said.

The Medicare Pioneer ACOs recently concluded their first year, so quality reporting scores are incomplete, and benchmarks are still being set.

Dr. Knight, who participated in some of the early Medicare demonstration projects, said one of most important lessons learned was that "the biggest opportunity for Medicare patients is in transitions of care, mostly back to the ambulatory realm, and especially in areas of complex comorbidity. And all [of the demonstration projects] had success in improving outcomes and efficiency" in that area.

North Texas Specialty Physicians saw those results early on in its ACO project.

When it began in December 2011, Dr. Pickell says, home health usage was "off the chart," double to triple that of the Medicare Advantage patients the group has treated for years. And several thousand of their newly assigned Medicare ACO population had no identifiable primary care physician.

By focusing on case management and getting patients the care they need, those statistics already have changed for the better.

One of Dr. Pickell's recently assigned patients had debilitating back pain from a construction accident a decade ago. "We discovered that he had been receiving home health care for 10 years without once having seen a primary care doctor. Why he had been receiving home health care for so long with no apparent oversight was not clear to us. But once he showed up on our panel, it was clear to us that what he needed was surgery," and he is now improving.

Like Kelsey-Seybold, NTSP essentially already had an ACO because it cooperated with THR to take care of a Medicare Advantage population under a coordinated care capitation model. That made the two organizations natural partners, he added.

Hospitals in some aspects play the role of a bank in that they help underwrite much of the capital costs of getting an ACO off the ground. They also provide much of the architecture and tools needed to operate, such as clinical information systems, case management capabilities, and experience negotiating large payer contracts.

"But we absolutely view this as a partnership with physicians. One thing we [hospitals] don't do is directly take care of patients," THR Chief Clinical Officer Daniel Varga, MD, said.

The hospital also has two commercial ACOs under way using its affiliated nonprofit 501(a) health corporation physician workforce, which Dr. Varga said was one way to launch quickly, given certain contracting barriers. Once up and running, the ACO plans to include community physicians.

"Almost all of the care in an ACO happens outside the walls of the hospital," he said, adding that all three of the hospital ACOs share governance with the doctors involved. "Physicians are going to help us guide, govern, and manage this health system. Not just admit patients to our hospitals."

Payers, too, are proving to be important players in ACOs. Not only do they look to the coordinated models to get more bang for their buck, but they also recognize their role in providing data to help physicians and hospitals attain that goal.

"We view it as a better contracting model than fee-for-service because it aligns incentives for providers to focus on the right things," said Scott Albosta, vice-president of network performance management for Blue Cross and Blue Shield of Texas, one of THR's commercial ACO partners.

Mr. Albosta says THR's purchase of a large primary care group to facilitate care for the ACO patient population was a key piece of the puzzle. That meant "we now have a primary care group we can attribute patients to, and in the PPO world, that means we can look back via claims and see visitation patterns" to help understand the patient population, their risks and needs, and how to improve their care in a targeted manner.

A workgroup of physicians, nurses, and other clinicians is doing exactly that as the budding ACO begins to define its operational and financial objectives. Because the Blues has a comprehensive claims history for the patient population, it says it can help provide a more robust picture of overall utilization in both the inpatient and outpatient environments. Physicians, on the other hand, can provide clinical quality data to the health plan.

Much of that historical and future data will factor into how payment is determined, too, and payers are expecting value.

The Blues-Texas Health ACO will start off with a shared savings model, and to reap those rewards, the contract will delineate the cost and quality metrics for which the physicians and hospital are accountable, Mr. Albosta says. He added that the payment model likely will evolve toward fixed payments.

Physicians are the foundation of any ACO, and their role, he says, "is to change the way they've been practicing in a fee-for-service world." With that commitment, "we [payers] will instill additional resources into the care continuum – care coordinators, nurse navigators, a level of analytical support – to help facilitate care through the physician."  

Positioning for the Future  

Covering the spectrum of care, amassing the necessary infrastructure, and maintaining financial stability are among several barriers to entry for small physician practices. Meanwhile, ACOs face other challenges that make it difficult to predict whether the model is here to stay.

As a pediatrician in Frisco, Seth Kaplan, MD, finds himself in the middle of a burgeoning ACO neighborhood, but he's concerned about the economic viability of the model. Cost savings is a key mechanism for generating additional payment, and he's not sure his two-physician practice can squeeze out any more than it already has.

"As pediatricians, we operate pretty lean already," Dr. Kaplan said, adding that his practice has been a member of two IPAs for years. "If you start looking at payment models where everybody has a piece of the pie, ours is already small. If it gets any smaller, it's not going to be viable," he said.

His practice continues to do its part to adapt to the new health care delivery environment, for example, by seeking medical home certification to increase collaboration and efficiencies. But before he takes on additional financial risk, Dr. Kaplan says he wants some proof the proposed vehicles of change are not a retread of old ideas.

"The fear is, we've been down this road before," he said.

As hospitals look to position themselves as an ACO by employing physicians to bring more services in house, primary care physicians like Gregory M. Fuller, MD, of Keller, are evaluating options to participate in the model while remaining independent.

On the other hand, he also wants to know what an ACO can bring to his four-physician practice. North Hills Family Medicine already is a certified medical home that has adopted electronic medical records and quality-reporting mechanisms.

"We're looking at ancillary services. Case management. Transitional coordination. Those are pieces we are missing. What can [an ACO] do to provide better care to my patients? That's the key."

He, too, wants assurance that primary care won't be undervalued the way it is in the current fee-for-service system. Those payment issues raise additional concerns because it may be difficult for primary care physicians to participate in more than one ACO, if the goal is to streamline patient care, he added.

While some physicians may be restricted, patients are not, if the ACO uses an open-network structure. The Medicare program is one example, and physicians in those models acknowledge that patient freedom could undermine efforts to improve and rate the quality and value of care physicians are accountable for.

Dr. Sheff says non-Medicare ACOs can adopt a closed, capitated model, but "if we have to rely on forcing the patient to stay in our network, then we are not meeting the patient's needs. So part of the issue is spending the time to figure out why patients leave."

As for payment, Dr. Knight cautioned that while there are short-term profits for physicians who get in the ACO game early, "long-term, this is about practicing medicine for reasonable reimbursement, not the straight fee cuts and treadmill of having to see more patients faster."

Even those physician leaders involved in ACOs acknowledge that the distant future remains cloudy. But for the next few years, some things are clear as health care delivery drifts away from a fragmented, fee-for-service system.

"It's going to be a more organized system of care, it's going to be consumer-driven, and there's going to be more transparency around quality outcomes and efficiency. Doctors have to be part of a system that helps them practice coordinated care, and there are lots of way to accomplish that while maintaining independence," Dr. Sheff said.

 Choices to Make 

As they scan the ACO landscape, physicians do have options in how they go about creating or joining one.

Physicians don't have to be employed, whether through a hospital affiliation or physician group practice. But they likely will have to practice in larger groups, Dr. Carter says. From influencing ACO governance and payment distribution, to holding physicians accountable, there is much to be gained from physicians organizing with strong leadership.

If there are multiple competing hospital systems in the region, a formal partnership may not be necessary. But physician groups may want to consider some sort of collaboration if there is a single hospital system, he says.

Geography is another factor. Because ACOs require a certain critical mass in terms of size, scope, and money, the model may better fit an urban setting than a rural one.

To improve access to capital for smaller rural or physician-owned ACOs, the federal health reform law created a Medicare Advanced Payment model. It provides up-front payments to help groups get started and invest in things such as staff, electronic data systems, and other necessary infrastructure. That money is recouped from any future savings earned.

In Texas, the 2011 Legislature authorized more scalable health care collaboratives, which also could give smaller practices an easier path to integrated care and alleviate some of the antitrust concerns that could arise when individual physicians collaborate. (See "ACOs, Texas-Style," June 2013 Texas Medicine, pages 25-28.)

Whatever path physicians chart, it likely will require change, which is why Dr. Carter issues this warning: "If you are thinking about joining an ACO, and the hospital or whoever is doing it says you can keep practicing the same way you are, I would be skeptical of that."

 Amy Lynn Sorrel can be reached by telephone at (800) 880-1300, ext. 1392, or (512) 370-1392; by fax at (512) 370-1629; or by email. 


ACO Glossary 

With no regulation on use of the term "accountable care organization," Medicare, private payers, and accrediting organizations each have their own definitions. Here's a glossary of some of the more recognized ACO programs under way.  

Pioneer ACO 
An ACO initiative the Centers for Medicare & Medicaid Services Innovation Center (CCMI) created for health care organizations and health care professionals already experienced in coordinating patient care across various settings. The model starts out using a hybrid fee-for-service (FFS)/shared savings payment structure. It then moves to fixed, per-member, per-month population-based payments, all based on performance metrics similar to those in the Medicare Shared Savings Program.

Medicare Shared Savings Program (MSSP) 
An initiative the Patient Protection and Affordable Care Act created. Its goal is improving coordination and cooperation among physicians, hospitals, and other providers to enhance quality and reduce costs. Participants share in the financial savings they generate by meeting established quality and cost targets, but take on less risk than they would in a Pioneer ACO.

Advance Payment ACO 
A CMMI initiative that provides additional support to physician-owned and rural health care organizations in the MSSP that would benefit from additional start-up resources to build the necessary infrastructure.

National Committee for Quality Assurance ACO 
An ACO accredited by the National Committee for Quality Assurance (NCQA). The designation allows aspiring ACOs to demonstrate they have met recognized standards. Some of the NCQA standards overlap with Medicare standards. An NCQA ACO, however, is not restricted to Medicare fee-for-service patients.

Commercial ACO 
A nongovernment ACO serving privately insured patients. Commercial ACOs are distinct from Medicare ACOs in that the commercial payer, such as a private health insurance company, is the entity driving the financial incentives for providers to improve quality and costs.


Are You ACO Ready? 

Deciding whether to participate in an accountable care organization (ACO) can be a daunting task. The models may take different shapes and sizes, but some fundamentals are necessary. Here are some questions that physician and industry leaders say practices can ask themselves to assess their ACO readiness. The more "yes" answers you give, the more ACO-ready you are.  

  • Do you practice in a group setting or in collaboration with other physicians?
  • Are you located in an area where collaboration across specialties and care settings is possible?
  • Do you have affiliations that enable your organization to deliver and coordinate care for a population of patients across various settings?
  • Does your group have strong physician leadership?
  • Do you participate in value-based initiatives that measure performance?
  • Is your organization willing to be held accountable for the clinical quality and total medical costs for a population of patients?
  • Do you have a data-collection system, such as an electronic medical record system, to track and report on quality and cost measures?
  • Do you have information on the utilization of medical services by your patients?
  • Do you have methods to track and discourage inappropriate emergency department visits by your patients?
  • Do you have mechanisms to conduct patient outreach and solicit patient feedback?
  • Are you willing to forego strict fee-for-service payments for value-based payment initiatives?


TMA Launches Physician Services Organization for Patient Care 

 As health care delivery and financing shift toward value-based accountable care models, TMA offers brand new tools to help all types of physician practices adapt to meet those market demands and provide more efficient patient care while preserving the patient-physician relationship.

From building practice infrastructure, to improving clinical and cost performance, to pursuing clinical integration, TMA's Physician Services Organization for Patient Care will offer services that bolster physicians' clinical and financial autonomy, whatever the practice's current level of sophistication may be.

A key element will be providing physicians easy access to data to measure and improve their clinical performance and financial viability. For example, one service might help physicians comb through their data to identify chronically ill patients who need extra help to stay as healthy as possible and stay out of the hospital. Another might align primary care physicians and specialists to better coordinate the care they provide to their common patients.

"The market is shifting rapidly. Physicians are under tremendous pressure to change what they've been doing. But no one is helping them do that. This is a very high priority," said TMA President Stephen L. Brotherton, MD.

He added that he is confident the Physician Services Organization for Patient Care "will save local practices. Texas doctors are determined to make health care better and more affordable for Texans. To do that, we need to shift the balance of power away from the government and the large hospital systems and back to the patients and their physicians."

Besides TMA, the Dallas County Medical Society (DCMS) and the Harris County Medical Society (HCMS) are key members of the organization. It will bring in new and existing physician groups, health plans, and technology vendors as needed to test and develop effective new care models.

"The health care landscape is changing dramatically for solo physicians to large group practices," said DCMS President Cynthia Sherry, MD. "This new organization will help all types of physicians deal with this great change. DCMS is proud to partner with TMA to provide these essential tools to physicians. Together we will help physicians meet quality benchmarks for patient care, leverage information technology, and compete successfully in changing financial models. The real winners will be patients."

HCMS President Russell W.H. Kridel, MD, said the new organization "will provide services to help physicians navigate the changing health care delivery system. The best use of a physician's time is in directly taking care of the patient one on one, not in dealing with red tape, reporting measures, and compliance regulations. This is exactly what is needed to maintain the sacred patient-physician relationship. It's very exciting to see new innovative projects like this that can help physicians spend more time with their patients."

"This is a physician-driven enterprise to improve patient care," said TMA Board of Trustees member Dan McCoy, MD, who chaired the task force that developed the project plan. He said it will "use the latest technology and data analytics tools to bolster the bedrock of our profession: the patient-physician relationship."

"This is the most important thing TMA has done since tort reform," said Don Read, MD, of Dallas, a member of the TMA Board of Trustees, which approved the organization at TexMed 2013 in San Antonio in May.

For more information about the Physician Services Organization for Patient Care and its services, email Kim Harmon, TMA's director of special projects. 

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