Medicare beneficiary James Conway, 73, has high blood pressure, a catheter that has led to several urinary tract infections and a condition that causes spinal fluid to build up in the base of his skull. In the last year, he's been in the hospital four times. Recently, the Berkley, Mass., resident says his care has gotten noticeably better. "We used to be left to our own devices to get somebody to help," he says, describing how he had to navigate between several different doctors.
Since the spring, however, pharmacists have visited Conway at home to examine his medicines, cut five from an 18-drug regimen, explain what each one does and create a spreadsheet to remind him of when to take them. They also check in weekly, as does a nurse, who helps organize his care and arranged for an aide to regularly change his catheter, something nearly impossible to get done before. "That was unbelievable for me," says his wife Kathy. "And they all leave their phone numbers with us."
Conway is part of a so-called accountable care organization (ACO), an experiment that is transforming the way health care is delivered in America. Many of the estimated 27 million people in ACOs aren't aware they are in one, but do notice that their doctors and other care providers seem more attentive to their needs. That's because ACOs, entities triggered by the controversial 2010 Affordable Care Act (also known as Obamacare), force hospitals, doctors and other health care professionals to rethink how they deliver care so it is more coordinated, better quality and lower cost.
How? Obamacare directed Medicare, the nation's largest health insurer, to change its fee-for-service payment system, which tends to promote more tests and treatments when less care (or more preventive care, or better-coordinated care) would often produce better results at a lower cost.
Officially a Medicare experiment, ACOs are proliferating. In the three years since Obamacare passed, hospitals, medical groups and other organizations nationwide have formed 488 ACOs, says Andrew Croshaw, managing director of Leavitt Partners, a health care consultancy that follows ACO development. "There are a lot of experiments happening in the commercial sector, too," he notes. Medicare contracts with 250 ACOs, covering more than 4 million beneficiaries; the rest of the ACOs operate under private health insurance deals covering 14 million to 23 million more people.
A Medicare beneficiary, Conway noted that his care changed when his primary care physician agreed to participate in an ACO sponsored by Steward Health Care System, a Boston-based integrated delivery network of 11 hospitals, 2,900 doctors and other health care providers caring for 1.2 million patients a year. Medicare pays Steward hospitals and doctors based on how successfully they treat 47,000 beneficiaries in Steward's ACO, with an eye toward keeping them out of the hospital in the first place.
"ACOs are very interested in reducing acute care, episodic hospitalizations," says Croshaw. "It is one of the key ways to have an ACO succeed financially." Specifically, Medicare sets quality benchmarks and spending targets for patient care. Medicare tracks ACO performance on 33 quality and performance measures, from patient satisfaction to hospital admission rates to how well ACO doctors help diabetes patients control their cholesterol. Then Medicare ACOs are given spending targets for patient care—adjusted based on the risk of each beneficiary—based on what Medicare would pay for uncoordinated fee-for-service care these patients would get in the traditional program. Only after an ACO hits Medicare-designated quality benchmarks can it share in any produced savings.
Reducing hospitalizations and readmissions is on top of the hit list for Steward, says Dominique Morgan-Solomon, director of care management at Steward. "Our objective is meeting the patients' needs and providing care wrapped around patients," she says. It's cheaper and often better to do that at a patient's home.
To that end, Steward arranges health care teams that include pharmacists, nurses, social workers, community health advocates, wellness experts and others to work with patients on an as-needed basis to keep them out of the hospital. It also arranges, for example, a 30-day supply of healthy, low-sodium and low-sugar meals for congestive heart failure patients, simultaneously enlisting a nutritionist to work with the patients to help them change their eating habits. "Food is also part of your medication," says Morgan-Solomon.
"I feel like there are people who are around me and are concerned," says Cynthia York, a Thousand Oaks, Calif., Medicare beneficiary whose doctor belongs to physician-led Heritage California ACO, one of the nation's largest ACOs. Thanks to Heritage, she's always reminded of preventive tests and screenings, had pharmacists do safety reviews of her drugs, learned to shop for healthy foods and attends ACO-sponsored social events, which range from breakfasts to exercise classes to bus trips to casinos in California. "I don't feel alone," she says.
"The first order of the day with us is to establish a relationship with patients," says Ian Drew, Chief Medical Officer for Heritage Provider Network, which operates the ACO. Heritage, which has been operating for 30 years in Southern California's risk-based contracting market, sponsors a litany of social events in the regions it serves. Through a combination of sophisticated information technology systems, a network of its own hospitalists, case managers embedded in area hospitals and relationships with hospital admissions departments, Heritage gets almost-instant feedback when a member is admitted to a hospital, allowing them to manage hospital care aggressively. Most patients who go to emergency rooms nationwide are admitted, Drew notes, even though "less than half are appropriate."
Besides coordinated care and social events, ACO patients are getting a range of eyebrow-raising personalized care. At Boston's Partners HealthCare, an ACO sponsored by Massachusetts General Hospital and Brigham and Women's Hospital, patients can schedule same-day doctor appointments via their smart phones and see dermatologists and other on-site specialists at the patient-center medical homes—primary-care doctor offices on steroids. New Mexico's Banner Health Network dispatches hospital-trained nurses to patients' homes to take blood-sugar readings and teach healthy eating habits. OSF Healthcare in Peoria, Ill., even arranged for a new, free roof for one elderly patient with lung problems whose leaking roof led to cough-inducing mold. Other ACO patient perks: outfitting patient homes with talking scales or other biometric devices, letting patients talk to their doctors via e-mail, text messaging or Skype-like apps, and sending safety experts to remove or secure potential hazards (fix dark lighting, securing rugs or attaching handrails by stairways).
All of these upfront efforts are preferable and cheaper to a hospital stay. Of the 250 ACOs Medicare contracts with, Steward and 31 others are deemed "Pioneer" ACOs, organizations experienced in risk-based contracting. Unlike other Medicare ACOs, Pioneers also share in any losses, or the portion of spending that exceeds Medicare's target. Early results are promising.
"These results show that successful Pioneer ACOs have reduced costs for Medicare and improved the quality of care for their patients," Centers for Medicare & Medicaid Services (CMS) Administrator Marilyn Tavenner said in July when announcing the results for the Pioneers' first-year performance. The elite ACOs performed better than providers in fee-for-service Medicare on all clinical quality measures. And their costs to care for the nearly 700,000 beneficiaries in Pioneer organizations grew more slowly than it did for patients treated in fee for service, saving Medicare $88 million. While all 32 Pioneer ACOs earned quality-related reporting incentives, nearly half produced shared savings—including Steward, Partners and Heritage—and just two had shared losses totaling $4 million.
But some question how far Medicare ACOs can really change patient care. "It's really tough to practice managed care without the patient's knowledge or consent, or sharing some of savings with them—the fundamental flaw in ACO program design," according to Jeff Goldsmith, president of Health Futures Inc., a health care forecasting firm, in a Aug. 15 Health Affairs blog post. Nine of the 32 Pioneers will not continue in year two—although seven are applying as lower-risk ACOs to Medicare Shared Savings Program.Still, best of all, ACO patients get all this extra attention and upfront care at no extra cost or hassle. Medicare beneficiaries see no changes to their benefits and are free to seek care from any hospital or doctor, unlike Medicare Advantage health plans that limit enrollee choice.
The onus is on the ACOs to make the care experience one that keeps patients coming back to its doctors. "This is a free-choice market and their choices are made on their perception of value," says Drew. ACOs are boosted in their population health efforts as Medicare provides three years of medical data on each ACO beneficiary.
Even with the data advantage, ACOs represent "a tumultuous experiment in health care payment and delivery" for hospitals and doctors, says Croshaw. ACOs are "trying to change decades of [fee-for-service] culture, incentives and care profits," he says, to focus instead on wellness.
That's tough in a system still dominated by fee-for-service payment and where hospitals thinking still is ruled by heads-in-a-bed mentality. As hospital- and doctor-led ACOs vie for patients, they also need each other. Hospitals have the deep pockets needed for ACO investments, including electronic health record systems and other technology purchases, and a visible brand in communities. Physicians don't have those assets but are critical in terms of influencing cost and utilization decisions, and are more closely connected to patients.
"This is the hospital of tomorrow," notes Dr. Timothy Ferris, vice president for population health management at Partners HealthCare. "It will be increasingly extending the scope of its operations outside of its walls. I don't see a bright future for hospitals not part of [the ACO] movement. It is absolutely essential."
Corrected, 09/03/13: An earlier version of this article stated that Heritage California ACO sponsors social trips to Las Vegas. The ACO arranges trips to casinos in California, not Las Vegas.