Are ACOs the next American health care revolution?

August 4, 2011
Are ACOs the next American health care revolution?
By John Dorschner | The Miami Herald

Last year, when blocked arteries landed Syed Abdul Qadri, 68, in Jackson Memorial Hospital, the public facility was struggling with some tough statistics: One in four of its heart patients was being readmitted within 30 days, a performance that put Jackson in the bottom quarter of hospitals in America.

The hospital steered Qadri into a pilot program aimed at reducing hospital readmissions through follow-up care — a concept that’s a forerunner of a major medical revolution coming to American health care.

In this new healthcare world prompted by national healthcare reforms, systems like Jackson will be held accountable for patients’ care even after they leave the hospital, a restructuring that will push doctors, hospitals, home healthcare agencies and others to work together in new organizations to improve patient care — or suffer financial penalties.

In Qadri’s case, a nurse visited his home in South Miami-Dade to make sure he filled his prescriptions, bought the proper medications for his heart and understood the importance of diet. She left him 10 frozen healthy meals, an improvement on the “spicy and greasy food I usually eat,” he said. The nurse promised to check in with him regularly to see how he was doing and provide more meals, he said.

A model of care that doesn’t stop when a patient leaves the hospital is one of the new ideas now shaping America’s healthcare future. And though Qadri’s case later became complicated by a heart attack, his experience offers lessons on some of the pluses and minuses the new system may offer.

At present, providers are paid on an à la carte basis — each test, each hospital admission is paid individually. The more tests, the more hospitalizations, the higher the pay for providers.

That will change starting next year when the healthcare reform act will start to favor groups of hospitals, doctors and others who band together into accountable care organizations, or ACOs, that will be rewarded for good outcomes of patients and penalized for bad outcomes. The penalty: If too many patients return within 30 days to a hospital, Medicare will penalize the facility by reducing its reimbursement rate by 1 percent starting in 2013 and by 3 percent in 2015, says Steven Ullmann, a health policy professor at the University of Miami.

Ullmann and other healthcare experts are convinced that where Medicare leads, commercial insurers will follow, joining the push toward ACOs. “It’s a wave that’s occurring,” Ullmann says. “You’re starting to see the preliminary adjustment going on. The jury is still out on how much it’s going to do.”

The wave is already influencing some areas of healthcare. Baptist Health South Florida has hired 80 doctors, at least in part to be ready for the ACO days. Elsewhere in the country, health insurers like Humana and Cigna are buying up physician practices for the same reason – a move that has massive implications.

Medicare is now forming regulations for the ACOs, which could be owned by one entity (such as a hospital) or be a network of independent doctors and facilities working together. With the stakes so high, hospitals, doctors, insurers and many others are objecting to the proposed regulations, some of which will kick in next year, as they seek the best possible deal for themselves.

“The rules are likely to change,” says Mike Segal, a healthcare specialist at Broad and Cassel, a Florida law firm. “Every trade organization is trashing them.”

But even if the objections lead to the courts killing healthcare reform, Segal says, that won’t stop the ACO trend: “It’s not going away. The idea of providing better quality care at lower cost through collaboration is here to stay. Fee-for-service as we know it is an endangered species.”

Current proposals envision ACOs starting out with the more traditional fee-for-service model – a separate payment for each service performed – but Ullmann says that’s only because Washington doesn’t want to stack on too many reforms all at once.

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