Lessons Learned from California Accountable Care Organizations
December 19, 2010
Posted by chcablogadmin in : ACO Update
ACO-type organizations have existed in California for about thirty years. With 285 ACO or “ACO-like” physician organizations currently serving 15.7 million of California’s roughly 37 million people, there would seem to be lots of lessons to be learned from California’s experience. In “Accountable Care Organizations in California: Lessons for the National Debate on Delivery System Reform,” published by the Integrated Healthcare Association, six lessons seem most germane to CHCA’s membership.
- A variety of organizational structures are effective at delivering high quality, coordinated care; at least equally important are the organization’s capabilities, culture and infrastructure and the degree of goal alignment between the organization and individual physicians. There needs to be strong leadership, a clear purpose, shared goals, availability and use of data to help reach the goals (supported by a robust health information technology infrastructure), performance feedback and accountability for individual providers, participation in external quality improvement incentive programs, advanced care coordination capabilities, use of coordinated chronic care teams, provider acceptance and use of evidence-based guidelines, and strong market incentives to provide value.
- In California a range of relationships exist between physician organizations and hospitals. Alignment of incentives between physician organizations and hospitals are important keys to performance improvements across the entire care continuum. While many California ACOs do not include a hospital as a member, with hospitals being the highest-cost element of the delivery system, including them in the initiatives to control costs and increase value is essential.
- While capitation is one payment method that can be successful, payment methods should vary across ACOs depending on each organization’s ability to assume risk. The authors say it is unclear if shared savings programs (versus capitation), as proposed for Medicare, will be enough to incentivize providers to transition from volume to value, or to invest in the infrastructure needed to provide effective care management.
- Most California ACOs have focused on commercial, Medicare/Medicaid HMO plans for their patients. But mechanisms need to be found to encourage PPO and traditional Medicare and Medicaid patients to use ACOs as well. Benefit designs should reward patients for choosing higher value ACOs. The current California market does not incentivize purchasers or consumers to choose lower cost, more efficient providers. Laws and policies must allow for innovative provider payment arrangements regardless of insurance type.
- Balancing patient choice with the desire to decrease costs and effectively coordinate care is difficult. It is much tougher to coordinate care in unrestricted provider choice environments.
- Special attention must be given to establishing ACOs in areas with social and economic challenges. Lower performing organizations were clustered in sociodemographic and health system challenged areas. Low payment rates means less capital for structural and process improvements. Even in integrated medical groups, Medicaid patients tend to be grouped due to low payment rates and the difficulty of providing a single standard of care where payment rates are so different among the various payers. While the Patient Protection and Affordable Care Act (PPACA) will provide more coverage in these areas, there will be a need to pay special attention to the quality gaps (and presumably to provide incentives to obtain and utilize the resources needed to address them).
Seventy-eight percent of California ACOs serve fewer than 50,000 patients with some small medical groups and IPAs being successful with fewer than 5,000 patients. The largest ACOs benefit from economies of scale but can also suffer from diseconomies of scale (e.g., loss of culture and sense of ownership by individual doctors). The authors also express concern about market consolidation and clout enabling very large organizations without competition to charge higher prices and be more lackadaisical about cost containment. Smaller ACOs can succeed via use of outside management service organizations and benefit from larger scale in information technology, contract negotiation and other administrative functions, which is especially important because most regions lack the population density necessary to support multiple, large ACOs. ACO expansion via mergers and acquisitions and across regions has been difficult.
The authors describe a new pilot in the Sacramento region involving Hill Physicians Medical Group, the California Public Employees’ Retirement System (CalPERS), Blue Shield of California, and Catholic Healthcare West (a hospital system). These organizations have formed a virtual integrated model and agreed to keep CalPERS’ costs at or below what they were in the Sacramento area in 2009.
You may also access the newsletter (ACO Update_12-20-10) as a document to print and share within your hospital.
Comments»
no comments yet - be the first?