ACOs will change how clinical laboratories and pathology groups provide medical lab tests


Clinical laboratories and anatomic pathology groups will need to gear up to support accountable care organizations (ACO) in advance of Medicare’s “Shared Savings Program” launch in January 2012. But decades after the first ACOs opened their doors, some experts debate whether they’ve succeeded in their mission, which begs the question, are they a good idea at all?

According to the Integrated Healthcare Association (IHA) who funded the report “Accountable Care Organizations in California—Lessons for the National Debate on Delivery System Reform,” ACOs are intended to “promote higher quality and more efficient healthcare delivery in the United states.” But according to the report’s author, James Robinson, director of the Center for Health Technology at the University of California at Berkeley, current ACO structures might need to be redesigned if ACOs are to be ultimately successful.

check list for aco's

ACOs are intended to “promote higher quality and more efficient healthcare delivery in the United states."

In IHA’s press release, Robinson said that “ACOs have become a focal point for helping our healthcare system transition from one that’s based mainly on volume to one that’s focusing on delivering real value.”

The “fee-for-service” (FFS) healthcare system—where a doctor’s pay is tied into the amount of services rendered, rather than the quality of that care—has come under fire because studies show FFS reimbursement results in excessive diagnosing and treating of patients. In turn, that contributes to increased healthcare costs. ACOs, with their capitation methods for paying physicians, and large-scale purchasing power, were going to teach the country how to increase care while lowering costs.

In July, Dark Daily detailed how pathologists and clinical laboratories could benefit from the provisions in the Affordable Care Act of 2010 that authorize the use of accountable care organizations to reduce the cost of healthcare.

California is a state where ACOs have existed for decades. That made California ideal for Robinson’s ACO research. He studied organization structure, payment methods, relations with health insurance plans, maintenance of consumer choice, and public policy regulation.

Robinson outlined his conclusions in 10 lessons derived from his research:

  1. “A variety of organizational structures are effective at delivering high quality coordinated care; at least as important to success as structure are an organization’s capabilities, culture, and infrastructure, as well as the alignment of goals between the organization and its individual physicians.
  2. “In California, a range of relationships exist between physician organizations and hospitals. Alignment of incentives between physician organizations and hospitals offer important opportunities for performance improvements across the entire continuum of care.
  3. “As a method of payment, capitation can be effective at encouraging coordinated care, but payment methods should vary across ACOs depending on an organization’s ability to assume risk.
  4. “Health plans acting in concert on payment methods and performance measurement helped facilitate the growth of California’s provider organizations, and should also play an integral part in fostering ACO development nationally.
  5. “ACOs are not a panacea for health care spending control.
  6. “ACOs must be agnostic to insurance type; most provider organizations in California have focused on commercial, Medicare, and Medicaid HMO plans for their patients, but for ACOs to be viable across the country, mechanisms must be found to encourage PPO and traditional Medicare and Medicaid patients to use their services.
  7. “Balancing patient choice with the desire to decrease costs and effectively coordinate care is difficult. California’s experience underscores the challenge of promoting care coordination in an environment of unrestricted provider choice.
  8. “Regulation of the financial solvency of provider organizations is important to ensure market stability.
  9. “Consumer protections from capitated provider organizations need to be balanced, not overburdening.
  10. “Special attention must be given to establishing ACOs in areas with social and economic challenges.”

Embracing PPOs (preferred provider organizations) might be a problem, because ACOs are generally not designed to allow consumer choice in providers without a gatekeeper.

“I personally think this is the biggest challenge to ACOs or coordinated care in general,” said Robinson in a November article in Modern Healthcare. “Either you want coordinated care or you want free choice at any time. We can blend them to some extent, and we should,” he said.

But free choice might be the deal breaker for ACOs if a model can’t be found to adopt it. According to Robinson, “commercial HMO enrollment in California is down 20%over the past five years.” Kaiser Permanente was excluded from this comment.

Nevertheless, California’s ACO’s are optimistic. Jerry Penso, medical director for continuum of care for the Sharp Rees-Stealy Medical Group in San Diego told Modern Healthcare, “What people need is help navigating the system. I think ACOs are trying to move us in the direction of the best aspects of managed care, but still with freedom of choice.”

And Bart Asner, CEO of Irvine, California based-Monarch HealthCare , said that an ACO’s ultimate success depends on patient and provider agreement in the system. We think that patients will reap the benefits,” he said. “Patients and doctors have to believe there is added value or it won’t work.”

There are plenty of predictions that accountable care organizations will play a major role in the planned transformation of healthcare during the next 10 years. Both medical laboratories and anatomic pathology groups will need to play a role in serving the ACOs that are developed in the communities they serve. For that reason, clinical laboratory managers and pathologists will find it useful to keep an eye on this trend as it unfolds.

Related Information:

Tests Were Inconclusive: California’s experiment with ACOs raises questions about whether they’ll save money

Integrated Healthcare Association Studies California’s Accountable Care Organization Experience—Identifies Valuable Lessons for State and National Health Reform Leaders

Accountable Care Organizations in California: Lessons for the National Debate on Delivery System Reform

Come 2012, Clinical Pathology Laboratories Will Need to Support Accountable Care Organizations