The complex “tsunami” now forging the future American health care system is exemplified by the proliferation of Accountable Care Organizations, also known as ACOs. Although still unproven as a comprehensive delivery model, ACOs – first included in the Medicare Program via the Affordable Care Act of 2010 – now cover greater than 23.5 million lives in all 50 states. At the beginning of 2015, there were 744 ACOs including Medicare and Medicaid ACOs, as well as Commercial ACOs serving global corporations like Boeing and Intel. ACO growth is continuing, with 89 new organizations planning to enter the market in 2015; moreover, CMS has the ambitious goal of having 50% of Medicare payments provided through ACOs and other alternative payment models by 2018.
Fundamentally, ACOs are formal organizations of health care providers (physicians, hospitals, networks) that accept financial responsibility for a population of patients, while simultaneously committing to improve quality of care, including patient experiences. The concept of “financial responsibility” is evolving, with most ACOs now sharing overall cost savings relative to a pre-negotiated target. Soon however, ACOs will be required to share not only savings, but also risks of cost overages. Ultimately, “financial responsibility” will be defined as full capitation, under which ACOs receive a fixed payment per enrollee, while still being required to meet all quality and patient satisfaction standards.
For Medicare ACOs, CMS has specifically defined 33 quality measures for 2015: eight measures rate patient experiences, such as timely appointments and information; ten include patient safety and care coordination, for example, unplanned hospital admissions for heart failure or diabetes; eight involve preventive care, like breast cancer screening; and seven define management standards for specific at-risk populations, such as hemoglobin A1c control in diabetics. Quality standards for Medicaid and Commercial ACOs are highly variable, and generally are being customized to meet the specific challenges of the populations served.
ACOs are causing disruptive changes throughout the American health care system. Under ACOs, the traditional American “fee-for-service” model disappears. No longer are providers and hospitals financially rewarded for performing costly tests and procedures; rather they are rewarded for helping enrollees avoid the need for such tests and procedures altogether. Traditionally, health care systems (and medical schools) emphasized acute care and hospitalizations; in contrast, ACOs emphasize health maintenance and avoidance of the acute care medical system. And when medical care is required, ACOs must be patient-centric and patient-empowering, with ubiquitous care coordination driven by explicit evidence-based care protocols, and team approaches that feature non-physician providers and eventually community extenders. Employing these concepts, some health systems have reduced the need for inpatient beds by 30% or more.
With these objectives and constraints, only large integrated health care systems with robust electronic medical records, seamless data collection across information systems, and advanced data analytics will be successful. Texas has many innovative companies providing solutions in this space, from large hardware/software providers like Dell, to highly innovative new data analytics companies like Austin’s Ayasdi, which employs advanced topological data techniques to glean new information from very large data sets.
The emphasis on health maintenance, i.e., the “health push,” is still only rudimentary. For example, while it is desirable to avoid unplanned hospitalizations for diabetes and heart failure, the objective should be to prevent diabetes and heart failure in the first place. To accomplish true health improvement and cost savings, current ACOs will necessarily evolve into what I am terming ACPOs – Accountable Care and Prevention Organizations. ACPOs will be fundamentally different, in that they will not manage health outcomes “to the quarter;” nor will they receive all their financial rewards in the corresponding short time frame; rather, ACPOs will manage outcomes over years or decades, which is the appropriate time frame to reap benefits from obesity prevention, smoking avoidance, immunizations, nutrition, environmental health, etc. CMS quality standards eventually will be adjusted to reflect a longer term view, and financial rewards will reflect more durable outcomes (not processes), such as reduction of BMI (body mass index) in place of the current “Health Promotion and Education.” Incentivizing long term outcomes is the only pathway to achieve improved health and quality of life, while simultaneously reducing the burgeoning health care costs.
The challenge of improving overall health, on the national scale, is not one that the US government and current ACOs are fully prepared to face, because the enabling technologies and behavioral change techniques required are not part of traditional core competencies. But fortunately, there is a tremendous “technology pull,” supplied by highly innovative small start-ups and global pioneers alike, that will offer the most forward thinking ACOs revolutionary pathways forward. An example is Arivale, a new-start wellness company cofounded by Dr. Lee Hood – member of the NAE, NAS, IOM, and recipient of the National Medal of Science. Arivale provides science-based, personalized definitions of wellness using systems approaches combining an individual’s genome sequence, gut microbiome, salivary chemistries, and activity/sleep. Arivale’s ultimate profile is then coupled to personalized coaching aligned with that individual’s life motivations. Closer to home, the Texas Medical Center Innovation Institute (TMCX) start-up company Redox has developed an application programming interface (API) that provides a common platform linking diverse health care applications (telemedicine, laboratories, analytics, and distributed patient engagement via smart phones and wearables) with the industry’s most prominent electronic medical record (Epic). On the other end of the corporate spectrum, Google X recently out-licensed a contact lens that continuously measures glucose in addition to correcting vision; and they are now developing nanoparticles that will continuously circulate in the bloodstream and provide the earliest possible detection of diseases such as cancer. My former agency, DARPA, has also started an entirely new office (the Biological Technologies Office) to catalyze life science innovations the way that DARPA gave rise to the internet, stealth, GPS, and modern semiconductor technology. Overall, technology-enabled distributed health care and prevention is emerging as an unprecedented market opportunity with literally hundreds of billions of dollars of opportunity over the next decade.
ACOs are still unproven, and perhaps a gamble, however, their current growth trend argues otherwise. But I believe the ACO model will succeed, because there is now a perfect storm that has not previously existed. First, the US must address the escalation of health care costs, and the hidden lost economic opportunities from chronic diseases. Second, ACOs are the first model that economically align all aspects of the health care system while improving quality and patient experience. Third, information technology and analytic tools are now sufficiently mature to handle the “big data” (individualized genomes to population health) required to predict and prevent individual and population risk. And finally, we are in the midst of a health technology renaissance, fueled by small innovators, that if appropriately leveraged by ACOs, will revolutionize our ability to improve overall health and eliminate disparities among those now underserved.
Brett P. Giroir, MD is Senior Fellow at Texas Medical Center Health Policy Institute, and Chair of the Blue Ribbon Expert Panel for the Congressional Veterans’ Access, Choice, and Accountability Act.