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.

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