Five Key Questions to Consider When Forming an Accountable Care Organization

April 18, 2013

An Accountable Care Organization (ACO) is a type of health care organization characterized by a payment and care delivery model that aligns financial interests of health care providers with the goals of decreasing spending and increasing the quality of care for patients. ACOs are accountable to patients and third-party payers for the quality, appropriateness and efficiency of the provided healthcare. An ACO is designed to lower healthcare costs by integrating patient care among providers, while ensuring that performance standards on quality of care are met. Below are five key questions for healthcare providers to consider when forming an ACO:

1. What are the core competencies of ACOs?

The tasks and goals of ACOs will require both the ACO administrator and participating providers to possess certain core competencies. Such competencies include, but are not limited to: (i) leadership, including the ability to develop strong teams and shared culture, mediate stakeholder priorities, and clearly and consistently communicate vision and strategy to both internal and external stakeholders; (ii) operational management, including the ability to aggressively identify and disseminate best practices that promote efficiency of care delivery, improved quality of care, and reduced cost within an organization; (iii) governance, including the ability to design and execute strategy and management performance goals, use fact-based planning to engage trustees, leverage profit with purpose, and deploy capital efficiency to implement strategy; and (iv) clinical management, including the ability to manage clinical pathways adherence by care teams, to redesign and align population-based health management processes with evidence-based guidelines, and to manage patient behavior and implement patient outreach, adherence and self-care.

2. How will healthcare providers address physician alignment and integration barriers?

Health care providers pursuing an ACO model will need to overcome physician attitudes favoring autonomy over coordination, especially if the health care provider does not currently have strong affiliations with physician groups. ACOs need a wide patient population to support the quality and cost-saving measures that come along with accountable care. In order to manage a large patient base, it is necessary for the ACO to have a significant number of participating physicians, especially primary care physicians, to coordinate care of patients within the ACO. Additionally, the ACO needs to truly integrate physicians into the process so the physicians can offer input into how to manage the various aspects of patient care.

3. How will ACOs maintain patient satisfaction and engagement?

Since health outcomes are largely dependent on a patient’s participation in their care, participating providers will need to ensure that patients have a basic understanding of health care costs and the importance of care delivery. Patients will need to understand how ACOs will impact the care they receive in the form of better quality, more efficient care and improved health outcomes. To assist patients, ACOs will need to encourage ongoing patient communication throughout the patient’s treatment with the ACO. ACOs can tailor, model and segment communication and education to utilize the best tactics and channels for each patient. Moreover, ACOs can offer patients an evolving range of self-help tools such as improved online access to appointment setting, bill review and payment explanations, or online pre-visit forms and checklists.

4. How will the ACO utilize health information technology?

Health information technology (HIT), such as electronic health records and clinical archiving systems, are the backbone of ACOs. An ACO requires electronic health records, data management, personal health records and health information exchanges to provide seamless communication of medical information between hospitals and physician groups. HIT captures necessary patient data; supports care-related transactions, such as e-prescribing; and provides clinical decision support that will help ensure that evidence-based medicine is delivered and that providers are aware of ACO quality and efficiency goals.

5. What legal and regulatory issues are associated with forming an ACO?

Sharing financial incentives across providers and incentivizing the use of evidence-based protocols can place participating providers at risk of violating federal laws aimed at preventing self-referral of patients and fraud and abuse of federal health care programs. Implementation of an ACO model, which may require hospitals and other providers to accept one payment for all services and share financial incentives, could be in violation of previous interpretations of the Stark Law, the Anti-kickback Statute, the Civil Monetary Penalties Law and antitrust law. Accordingly, the ACO’s relationships with hospitals and other providers must be properly structured to comply with these laws.

McGuireWoods’ health care group counsels clients from all sectors of the health care industry. If you have any questions regarding preparing for an ACO or forming an ACO, please contact one of the authors. For related information see our previous alerts: ACOs: Five Tips for the Medicare Shared Savings Program and Four Facts About Accountable Care Organizations.