Already this year, healthcare providers have launched 106 new accountable care organizations (ACOs) that will reach as many as four million beneficiaries, Health and Human Services (HHS) Secretary Kathleen Sebelius announced Jan. 10.
Since 2010, more than 250 ACOs have been formed, with this year representing the largest batch to-date.
"Accountable care organizations save money for Medicare and deliver higher-quality care to people with Medicare," said Sebelius, in a statement. "More doctors and hospitals are working together to give people with Medicare the high-quality care they expect and deserve."
ACOs share with Medicare any savings generated from lowering the growth in healthcare costs, while also meeting a series of standards for care quality. To participate in the Shared Savings Program, ACOs must meet a series of eligibility requirements, must serve at least 5,000 Medicare fee-for-service patients and participate in the program for a minimum of three years.
The Centers for Medicare & Medicaid Services (CMS) has established 33 quality measures, including some for care coordination and patient safety, appropriate use of preventive health services, improved care for at-risk populations and patient/caregiver experience.
According to CMS data, roughly half of all ACOs are physician-led organizations that reach fewer than 10,000 patients. Community health centers, rural health centers and critical access hospitals that serve low-income and rural communities account for some 20 percent of ACOs, officials say.
Financially, forming an ACO is no small endeavor. According to a recent report published by the American Hospital Association, ACO start-up costs for a one-hospital system with 200 beds could exceed $5.3 million. Ongoing annual costs could be more than $6.3 million. A five-hospital system with 1,200 beds would see expenditures near $12 million in start-ups costs and a hefty $14 million in annual ongoing costs.
Although ACO expenditures are considerable, proponents say the cost savings should also be taken into consideration. Officials at CMS have projected that federal savings from this initiative could reach $940 million within a four-year period.
Further, a September 2012 study conducted by the Dartmouth Institute for Health Policy and Clinical Practice, examined savings associated with the Physician Group Practice Demonstration, a Medicare program that ran from 2005 to 2010 and closely resembled current ACOs. Study analysis pegged the average annual savings from this value-based payment model at $114 per Medicare beneficiary. However, some providers saw as much as $866 in savings per Medicare beneficiary.
For Alegent Health Partners - one of the 106 news ACOs that will serve some 20,000 patients in Iowa and Nebraska - that could represent between $2.2 million and $17.3 million in annual savings.
Henry Sakowski, MD, medical director of the ACO, said the group's focus would be on care coordination. It has already hired 32 nurses to function as care coordinators in each of its clinics. Moreover, Alegent Health Partners is adding registries in each of its clinics.
Care coordinators will work with the clinic team to start using the registry and begin looking at "opportunities for better care coordination, gaps in care and then identifying patients with multiple chronic conditions," Sakowski said. In efforts to really curb the readmissions rates, the group has also hired two social workers, a pharmacist and a nutritionist, who is working with the nurses to develop nutritional plans for patients dealing with obesity, diabetes and heart failure.
In terms of good hard evidence that this care model is paying off, Sakowski said it's too soon for those results. "We have a lot of anecdotal quotes of patients' care being enhanced by the work of the care coordinator," he said, however, as well as "identifying needs that were previously unaddressed and then finding resources to help those patients who would otherwise be floundering."
Benjamin Shaker, director of clinical integration at eight-hospital Orlando Health System, oversees Collaborative Care of Florida, one of HHS' 106 new ACOs. He said the group would reach some 10,000 Medicare patients at Orlando Health and multi-specialty healthcare group Physicians Associates.
Considering that the ACO just launched Jan. 1, Shaker said right now it's about getting the proper infrastructure up and running, and implementing the proper procedures and tools to gauge quality metrics.
Collaborative Care of Florida will roll out Phytel's population health management solution, which provides the group's patient registries, and will be used to follow up with patients post-discharge and track quality metrics.
As for how they're going to retrieve those metrics, Shaker said, "We have to make sure, first, that all that data is being captured in our EMR. That's priority number one." Other metrics will come from patient satisfaction scores and CMS claims data, to which the ACO will have access.
"We're excited about this model of care," said Shaker. "We spent a lot of time fighting for it, and now that it's here, we see this really as being a way of the future."
