In the here and now is the Affordable Care Act, making headlines almost daily about health insurance exchanges and impacting 10 million to 15 million Americans this very moment. Also in the here and now are Accountable Care Organizations (ACOs), although rarely, if ever, making any headlines. But they are becoming an establishment that will impact every American’s health care for years to come.

ACOs are popping up like weeds in springtime, nearly 400 at this writing and counting. They will impact not only every patient but also every health care professional, including pharmacists. To know about the ACA but not ACOs, or vice versa, is to be underinformed. To be conversant with both takes up a great amount of cranial disc space. These developments are not times for the timid, the risk averse or the chronically cranky about change.

Robert Coopman

One central tenet of ACOs must be understood. While they are being organized for and approved by the Centers for Medicare and Medicaid Services (CMS) to serve Medicare recipients, the intent is to form the standard of care for every patient served by every ACO. Further, in years soon to come, all health care providers will be a central part of, or contracted with, an ACO. Evolution is one thing, revolution quite another. ACOs are on the revolution side of the continuum.

Unless a company has pharmacies that operate in Alabama, Georgia, Florida, Virginia, Missouri, Mississippi or Texas, the business called Practice iQ may be unfamiliar. Actually, if a retail executive has pharmacies operating in any of these states or lives in one of them, his or her reaction still may be the same: What is ­Practice iQ?

For purposes of this writing, Practice iQ will be used as an example of one company’s effort to help and support ACOs. Practice iQ is a business of Healthagen, which is part of Aetna.

At this writing, Practice iQ is some two years young, and has developed new products and services to support provider groups’ transition to new value-based care business models.
The Practice iQ business is getting traction and growing, and management is patient but determined. One gets the clear impression that, for Aetna, it is worth the investment to use Practice iQ as an enabling effort to prove out a new health care management model.
ACOs are envisioned to shape how health care in the United States will be practiced in the future. For a company like Aetna, being involved early on in a big way is the price for continuing to be a major player and for helping bring large chunks of business practice definition into clearer focus.

The point must be emphasized that while Aetna may be correctly perceived to be in the business of health care insurance, Practice iQ is about health care management. As the latter reduces costs with concomitant superior health outcomes, the business of health care insurance brightens.

The genesis of Practice iQ is driven by the CMS Five Star Rating System, written about previously in this column. The intent of Practice iQ is to assist, to transform and to lead. In addition to ACO participant leaders, adherents, followers and supporters are essential for professional and financial success.

With the CMS stake in the ground for patient management and provider reimbursement change, value-based care has become part of the health care lexicon. Personal and financial success for providers will be based on producing improved patient outcomes at less cost. Patient satisfaction, carefully evaluated and measured, will be part of the ACO compensation equation for Medicare patients today and for more and more patients in the future.

The days of providers being paid solely for procedures will soon begin to fade, making some health care professionals either concerned or outright cranky about it. The CMS Five Star Rating System, motivating improved patient outcomes at reduced cost, has become the driver that compels provider attention. It is shaping the future of health care management, provider behavior, patient behavior, provider reputation and provider compensation.

It demands behavioral change of a magnitude that makes marriage counseling look easy.
Indeed, while many efforts of this magnitude on a national scale ultimately suffer from reform fatigue, this one seems to be gaining steam. To those with the courage to take it on and shape the future, it is described to this writer as energizing.

As mentioned, ACOs are popping up like weeds. While they are becoming prevalent among hospital systems, physician-led ACOs have surpassed the number of those linked to hospitals. Practice iQ is working with independent primary care physicians to provide them with capabilities and consulting about how to work with other practices as part of a qualified ACO. The concept is to begin with an “anchor tenant” and add to it other primary care providers, including those as small as solo practices.

According to Kristine Hunt, Practice iQ’s vice president of product management and strategy, the company presents to its business clients an end-to-end package to become an ACO. To support its initial development, an aspiring ACO receives assistance in establishing a board structure, which can include a medical director, an executive director, a quality committee, a utilization committee, and financial and communications committees. Additional business services provided include population health program management and analytics consulting, all to establish and perform against value-based care contracts with various provider and payer entities. Care coordinators are embedded within local practices to help them manage high-risk patients.

This is precisely where pharmacy fits into the mix.

To achieve superior outcomes with high-risk patients who have multiple chronic conditions, an active medication therapy management (MTM) component is necessary. For these patients, upon hospital discharge or following visits with specialists, medication reconciliation is critical. Pharmacies and pharmacists are an integral part of producing superior patient outcomes at reduced cost.

As currently structured, pharmacies contract with an ACO for MTM services for high-cost patients managed by the ACO. The Pharmacy Quality Alliance, under the highly capable direction of executive director Laura Cranston, has developed the backbone success measures for MTM for participating pharmacy organizations. Included is medication adherence and medication reconciliation, preventing high-risk patients from taking medications with ­contraindications.

In the final analysis, pharmacy has little choice but to participate. This is the future of how the profession will be included in the ACO game. Like other ancillary care providers, the gain for pharmacy is to be awarded a coordinated care services contract receiving referrals from care managers for high-cost patients. Financially, these patients with multiple chronic conditions and multiple medication needs are important for any pharmacy business.

While the foregoing array of services is impressive in its own right, for Practice iQ the backbone of the solution is a robust information technology platform. This IT platform functions to collect patient and provider data from the contracted ACO primary care physicians, affiliated specialty care physicians and payer claims information. The necessary aggregated data points then populate an informatics system. Reports on cost and quality issues for important medical conditions are produced for chosen individuals or groups of patients, physicians, and other providers.

Why the focus on becoming an ­approved ACO? Follow the math for the following example. While this example is theoretical, it closely resembles an actual ACO. The numbers are defensible:

• 60 primary care physicians.
• Average patient load per physician: 2,500.
• Total ACO patient care population: 150,000.
• Average proportion of Medicare covered patients in each physician patient population: 15%.
• Average total number of Medicare patients in ACO patient care population: 22,500.
• About 3% of high-cost patients generate about 50% of all expenditures.
• Three percent of 22,500 Medicare patients: about 675 ­patients.
• Three percent of entire 150,000 patient care population: 4,500 patients.

As part of the reduced care cost commitment, CMS will share with the ACO 50% of the annualized savings for high-cost Medicare patients. Thus there is financial incentive to produce improved patient outcomes at lower cost. So that quality of care is simultaneously improved, outcome metrics and patient satisfaction surveys are collected and evaluated, acting collectively as key components of the ACO performance goals.

Obvious is the requirement for setting new benchmarks for performance. Thirty-three CMS quality measures are in place with a triple focus — to improve quality patient outcomes, to assure patient satisfaction and to reduce cost of care. Patients are surveyed and asked to respond to seven satisfaction measures. Additionally, eight preventive measures are required that focus on cancer screenings, body mass index control, tobacco use, hypertension, immunizations and depression screening. Cost-of-care metrics are meticulously analyzed to track savings per patient.

For an ACO to be approved by CMS, an electronic health record is required.
If an ACO reduces medical costs for its Medicare patient panel by the minimum requirement of 3% to 4% from the prior year, the ACO will receive 50% of the savings.
As an example:

• Fifteen thousand patients generate $100 million of cost in year one.
• In year two they generate $92 million.
• The amount saved is $8 million.
• Half, or $4 million, goes to the ACO. CMS — think tax payers — benefits from the rest.

Nothing this revolutionary in health care comes without its roadblocks and hurdles. This writer is told that after all the organizational and approval hurdles have been overcome, the next is to raise ACO competence to report properly. That this involves a significant organizational and technical effort is easy to understand. Practice change of this magnitude can and sometimes does become personal.

From an ACO organizer’s point of view, pharmacy services are not in the top half of all priorities. That is understandable. What is difficult to comprehend is that pharmacy is perceived to be a latecomer to the table, with an unclear definition of what it can provide and how that will be accomplished.

That is not to say that nothing is happening with chain pharmacy organizations involved in coordinated care contracts. Most, if not all, of the major chains have experiential learning going on with large regional ACOs. As each chain pharmacy player is concerned with achieving a competitive advantage, understandably little is being said or reported about what is happening and what is being learned.

The timing of this article is such that CMS has just reported financial results for 220 qualified ACOs for performance in year one involving part of 2012 and 2013. The report is fascinating. Of 220 ACOs involved, 53, or 24%, achieved savings. Before considering that a relatively poor performance, think about the magnitude of the organizational and behavioral change necessary to create superior performance. This is year one. Practice does create perfect. Performance will no doubt improve, substantially so. Digging into the details is ­instructive.

One ACO received over $28 million in shared savings. Seven received over $10 million. Nineteen received between $5 million and $10 million. This is important, as it defines why practitioners and investors would be interested in an ACO.

Incentive cost reduction concurrent with patient satisfaction is compensation over and above being paid for office visits, procedures and the like. This is critical to the new patient care experience, and it must be earned by producing superior patient outcomes and patient satisfaction at less cost.

Perhaps beyond the financial impact of achieving those results at reduced cost is the public ranking of such organizations. CMS has and will continue to publish results for all the world to see. For ACOs that are achievers, this kind of public recognition and its marketing and public relations component are not for sale, at any price. It can only be earned. For those not performing or underperforming, it should function as a wake-up call. This is, in effect, the consumer report for individuals and families to use when choosing a physician in an ACO.

To be sure, to become a top-tier ACO, the up-front cash outlay is, by any measure, substantial. Consider a prospective contract start date of January 1, 2015. It will not be until midsummer of 2016 before any shared savings show up, if, in fact, they will ever be achieved. Consider also the organizational cost prior to any contract start date. To be associated with the right financial partners is critical in the development process.

Because it has been well recognized that quality, patient satisfaction and cost of health care is unsustainable under the old method of provider compensation in the United States, change is afoot. Indeed, both the ACA and the development of ACOs are shaking some foundations of how health care is delivered and paid for.

One is left to ponder many questions. Among them, if inefficiencies are removed from our health care system, if patient satisfaction improves and resulting costs are reduced, won’t the U.S. economy be more competitive in world markets? Why shouldn’t physicians associated with ACOs that produce superior patient outcomes receive greater compensation for their efforts?

And why did it take this long?

ROBERT COOPMAN is president of Robert Coopman Associates, which is based in San Antonio. He can be contacted at [email protected].