Health Affairs Special Issue on ACOs

This month’s issue of the health care journal Health Affairs was a special issue dedicated to the discussion of Accountable Care Organizations, also known as ACOs. The issue describes a number of exciting changes in approaches to health care being explored using ACOs. ACOs are organizations that provide care for a defined population. Under the new health care legislation pilot ACOs must provide universal care for a population of no less than 5,000 Medicare beneficiaries. The idea is akin to a large scale version of capitation. Instead of getting paid a set rate per patient, an organization gets paid for performing capitated care in bulk, providing all the health care needs for an entire community. The benefit of such a structure is that it creates the potential for novel, community-based interventions to save costs.
ACOs provide an exciting, rational reimbursement structure that would provide powerful incentives for decreasing costs through better care. If all patients within an ACO had electronic, perspective health care medical records, the community could potentially track not only health care needs of individuals, but could also identify health care needs of an entire community. For examples if a large number of patients were finding it difficult to find the time to exercise at work or were decreasing in cognitive decline due to a lack of social interaction, the ACO could use this information to intelligently guide community innovation that would benefit individuals on a large scale and result in further cost savings, improved health, and perhaps even quality of how the elderly live their lives.

State of the Union: Health care debate continues

Despite reassurances from the President in Tuesday’s State of the Union Address that the Affordable Care Act will slow rising health care costs, debate on the health care law didn’t skip a beat come Wednesday morning on Capitol Hill. The House Budget Committee is holding hearings this week to evaluate the economic impact of health care reform. On Wednesday the testimony of the CMS Actuary garnered quite a bit of attention when he expressed his doubt that the law will be able to bring down unsustainable health care costs. The White House was quick to respond with a post by Stephanie Cutter pointing out key elements of the law which independent experts have argued will result in cost savings. Notably, Cutter highlights both payment reform and the creation of Accountable Care Organizations to coordinate care as a means to improve health care quality and efficiency. These same sentiments are echoed in a letter released on Wednesday which was signed by over 200 health care leaders stating that the Affordable Care Act contains almost every cost-containment provision that is considered effective at reducing health care costs. The letter counts increased emphasis on wellness and prevention as one of the effective cost containment measures in addition to models of coordinated care and rational reimbursement.
We at the Center believe that providing smarter health care can both improve quality and decrease costs. Although there are a staggering number of variations on the theme of coordinated care, pilot projects in patient populations have shown considerable cost savings in a number of such projects. This is particularly true in populations with heavy burdens of chronic disease, whose inherently high disease costs provide an equally high potential to save costs over conventional approaches to care. My colleagues and I published a piece in Academic Medicine back in November discussing how personalized medicine provides a standardized approach to overcome impediments to both coordination of care and rational reimbursement. As a model of health care which is equally effective at disease prevention and treatment, prospective health care provides an approach on which to base many of these cost containment measures.

Medicare Jumpstarts Wellness and Prevention Efforts

As of January 1st of this year, Medicare must now provide free annual wellness visits and personalized prevention plans to their beneficiaries as stipulated by PPACA. An article by Francine Russo in this month’s Time Magazine discusses what these wellness visits and personalized prevention plans might look like in practice and some of the barriers providers might face in implementing these new measures. The wellness visits and prevention plans described in the article focus exclusively on lifestyle interventions aimed at improving diet, increasing exercise and limiting smoking – a far cry from utilizing an array of risk predictions tools to quantify all of a patient’s individual health and disease risks over time – but an important and critical movement in the right direction. The article points out the difficulty physicians might have in finding the time to fit a comprehensive personalized prevention plan that is thorough enough to be effective, yet compact enough to squeeze into their already packed visits with patients. These types of behavioral modifications are notoriously difficult to initiate and maintain over time. With this new tenet of health care reform going into effect, physicians will now be reimbursed by Medicare for taking the time to work with patients to try and address these lifestyle issues. Such a large undertaking will require the coordination of care between physicians, patients, and nutritionists, lifestyle coaches, etc. in order to be effective. These changes in reimbursement may be just what was needed to kick-start the wellness and prevention movement.

The ghost of past, present, and future health care – cost.

On Christmas Eve, Uwe Reinhardt posted a piece which raised a familiar ghost of healthcare past, present, and future: cost. The post reminds us that between 2000 and 2009, Medicare spending on physician services per beneficiary rose a whopping 61 percent, even though physician fee rates only increased by 7 percent. Reinhardt argues that he culprit behind this pattern of cost increases is increased utilization, with the fastest growing sectors of health care utilization (imaging and diagnostic testing) increasing by 80% between 2000 and 2009. Increased use of health care resources is not necessarily a sign of bad healthcare, but it is a sign of expensive healthcare. If we knew what was driving increasing utilization and how to control it, we would be able to largely rein in skyrocketing health care costs. Although a portion of these increases may reflect new, valuable health care technology and improvements, a larger portion likely just reflects more health care. The underlying etiology of this latter type of health care spending includes self-referral, a misaligned fee for service reimbursement model, and patient demand. A prospective model of health care would address all of these issues by coordinating patient care and removing duplication of diagnostic testing, providing rational reimbursement to discourage unneeded and self-referral driven testing, and engaging the patient in the decision making process so that they might be less likely to demand costly services that often lead to little, no, or potentially negative health benefit.