Accountable care organization (ACO) and medical home differences

by Kevin Fickenscher, MD

In the great healthcare alphabet soup, it’s easy to lose sight of the differences between proposed solutions for making healthcare more efficient and effective.

Rather than tackling payment reform in isolation of care delivery, Accountable Care Organizations (ACOs) and Medical Homes offer a consolidated approach to both issues. While the models are still developing, various pilot programs are being implemented around the country.

Accountable care organizations are vertically integrated organizations of care, which are at minimum composed of primary care physicians, a hospital, and specialists. The various members of the healthcare team work together to improve the health of a designated population.  The intent is to coordinate care under the auspices of one organization. In theory, if the patient of an ACO is seen outside of the organization, the ACO maintains responsibility for the health of that individual.

But where does the “accountable” part of the name come from?  Well, in an ACO, providers are held directly responsible for the health of their patients and are evaluated based on their effectiveness, efficiency and quality of care in treating patients. The “responsibility” piece is the key differentiator of ACOs compared to more traditional health maintenance organizations (HMOs). While both approaches provide patients care that starts and ends with a primary care physician, provider members of ACOs work together across all of the specialties to develop care delivery programs which focus on outcomes and coordinating care.

To qualify as a Medicare ACO under the new healthcare reform package, organizations must agree to be accountable for the overall care of their Medicare beneficiaries, have adequate participation of primary care physicians and specialists, define processes to promote evidence-based medicine, report on quality and costs measure, and coordinate care.  ACOs encourage physicians and hospitals to integrate care by holding them responsible for quality and cost.

The incentives of the ACO are clearly different from the current fee-for-service reimbursement system.  The focus of the ACO is to streamline its processes and care while exceeding the norm on quality and outcomes.  If the organization spends less than projected, all members of the ACO share in the bonus payments thereby incentivizing effectiveness and efficiency.  If, on the other hand, an ACO underestimates the cost of operation, the providers will earn less, thereby institutionalizing “accountability.” Patients’ rights advocates have expressed that the model incentivizes providers to save money by cutting corners in treatment. Advocates argue that ACOs are not only responsible for setting and meeting goals on effectiveness and efficiency, but also on quality of care as measured by patient population health.  The approach is designed to assure best efforts on the part of every member of the organization and to streamline care while ensuring its effectiveness.

Medical homes are similar to Accountable Organizations in that they consolidate multiple levels of care for patients. However, medical homes take the approach of having the primary physician lead the care delivery “team.” Simplistically, an ACO consists of many coordinated practices while a medical home is a single practice.  A medical home has several key characteristics, including:

  • Designation of a personal physician– each patient has an ongoing relationship with a personal physician trained to provide first contact, continuous and comprehensive care.  Also, the personal physician leads a team of individuals at the practice level who collectively take responsibility for the ongoing care of patients.
  • Whole person orientation– care is organized around providing services for all of the individual’s health care needs.  The medical home takes responsibility for appropriately arranging care with other qualified professionals on an as needed basis.
  • Care coordination and integration – care across the spectrum of specialists, hospitals, home health agencies, and nursing homes is coordinated with the personal physician leading the effort.
  • Evidence and outcomes focus – the quality and safety of care are assured by a care planning process using evidence-based medicine, clinical decision-support tools, performance measurement and active participation of patients in decision-making.
  • Enhanced access to care – practices are “open” in the sense that scheduling is available to individuals, hours of practice are expanded hours and new communications options are deployed for the convenience of individuals seeking care.
  • Comprehensive payment model – payments for services for individuals enrolled in the patient-centered medical home reflect a comprehensive payment for services that extends beyond the face-to-face visit with the personal physician.

The new healthcare reform package includes support for pilot programs for both the ACO and medical home initiatives under the Medicare program.  While these two approaches to care delivery and payment reform remain under development, they offer a glimmer of hope on how we can stretch the healthcare dollar further, focus on care delivery efficiency and drive quality results.  It’s clear that the final approach is very much on the drawing board and providers across the spectrum clearly have an opportunity to develop models which meet the needs of their respective communities.  We will continue to follow this exciting development in the coming months.

Kevin Fickenscher is the Vice President of Strategic Initiatives for Dell Services Healthcare, and blogs at ACO Watch.

Submit a guest post and be heard.

Comments are moderated before they are published. Please read the comment policy.

  • FPDoc

    We should also address possible setbacks and see what possible faults that may need addressing with this model.

    This model would work fantantastic for the healthy to occasionally ill patients who are cheaper to care for. This would lead to greater cost savings for the ACO and hence more income.

    I foresee very expensive patients and sick patients being shunned from the practices due to their high cost of care and complication rate. Remember the reports of Private medicare advantage insurance offices on 3rd floors of buildings with no elevators to prevent sick people from coming up to sign up?

    This doesn’t take into account that with high deductable insurance becoming the norm and benifits being slashed that people will use less care. This would equal poorer outcomes for the patients and with the ACO model, less incentive to participate.

    I don’t know what the answer is, but if this leads to patients being taken better care of, Im all for it.

    Time will tell.

  • r watkins

    It seems that almost all of the ACOs will be organized and managed by hospitals/hospitals chains, while the docs are still trying to figure out the intricacies of anti-trust regulations. The hospital-run ACOs will then work to increase market share so they can: 1. negociate higher payments from insurers, and 2. cover any loss in revenue by cutting doctor pay (which they will be able to do because the ACO has all the patients).

    And this benefits whom?

  • GlassHospital

    I’d still like to hear the differences between ACOs and PCMHs articulated more clearly. I fear that they’re too early in their development to have it explained clearly.

    ACOs seem a financing model aimed at improving delivery , while PCMH seems mostly a delivery model aimed at improving finances.

    Shall the twain meet?

    -Dr. John

  • Jo

    Differences between ACOs and PCMHs:

    ACOs have for its hub of coordinated care the PCMHs. With the PCMHs referring outward to the specialists and the Hospitals. In other words the Patient Centered Medical Homes become the hub of the ACO with the patient in the center of the PCMH.

    PCMH is, as stated above, where the patient starts and ends. They come to the PCP, are diagnosed, treated and managed then in the case of emergency are referred out to the hospital, who then refers them back to the PCP, or referred out to a specialist who after diagnosis and stablization refers the patient back to the PCP.

    It looks something like this:

    The paitent establishes with a primary care physician and buys into the concept of coordinated care with one physician who oversees, refers them only when indicated to the hospital or to a few specialists who will communicate back to the PCP in a timely thorough manner and the PCP accumulates and stores their medical record then manages chronic ongoing illness.

    The up side to this is that patients get followed by one physician who knows:
    The pateint (and usually their families) and all of their medical problems
    All of the medications the patient is taking
    All of the medication allergies
    All of the other physicians the pateint is seeing
    When the last tests were run, when the last screenings were done and all of their co-morbidities.

    This is a whole person/patient-centered approach.

    The hope is that by regular screenings, by keeping the record in one place, which is overseen by one physician group it will decrease costs by:

    1. Early detection and treatment of disease
    2. Decreased self-referrals for symptoms they do not understand and therefore refer themselves to the wrong specialty, who then in turn refers them again to another specialty
    3. Decrease specialty to specialty referrals where repeated imaging and lab costs are performed sometimes unecessarily as the PCP may have had imaging and extensive labs drawn a few days before.
    4. Most Initial Diagnosis and management and medications for chronic disease being done by PCPs who knows the patient’s medical history
    5. PCP offices opening access to their patient population so urgent patients can be seen either that day or the next and also staying later in the day for a few acute patients and being on call to direct emergency care after hours.

    The sub-specialists then are utilized to help with difinitave diagnosis with specialized testing and treatments, treating the “zebras” instead of utilizing their offices for urgent care or chronic disease/medication management that is well within the scope of practice of primary care.

    The hospital then is used for unstable patients, true emergencies, accidental incidents, specialized testing and surgeries instead of management of urgent or chronic illnesses through the emergency department (the most expensive care in the world).

    When it is set up in a 50% to 50% ratio of Prmary Care Physicians as one half and Hospital/Specialists in the second half with reimbursement being distributed likewise, it is a very attractive model for both physicians and patients.

    Warning: If hosptials and specialists want to control it and use the PCPs as dumping boys and keep payment at the status Quo in order for this to be a windfall for them, be aware that the patient outcomes will suffer, the costs saved will not be significant and the experiment will fail and the pateints will be the ones who suffer the most in the long run as more and more PCPs will quit and the specialists will be left to run the ACO with no PCPs which is counter to the government’s mandate.

Most Popular