Much of the U.S. healthcare debate is focused on improving patient care and reducing costs. While these objectives aren’t mutually exclusive, success requires change from its current fee-for-service (FFS) model, which revolves around individual treatments, to a holistic approach that measures patients’ overall health, wellness and quality of care. Boston-based L.E.K Consulting offers steps for creating an accountable care organization (ACO) in a recent white paper.
This shift in healthcare delivery will require better coordination among providers, insurers and government agencies. Although there is consensus about the need to adopt a more holistic approach, there are competing visions for implementing this new healthcare ecosystem. Among the things being debated, the accountable care organization (ACO) model has the promise of achieving these goals.
This has payors (government or private insurers) establish financial incentives and risk-sharing with providers. ACO’s sustainability is predicated on hospitals and providers having the appropriate financial incentives and infrastructure to treat patients while managing their costs more efficiently.
L.E.K Consulting recommended these steps:
Reassess market needs:
- Hospitals: Hospitals must realign their services and investments to meet community requirements and develop strategies that provide efficient and cost-effective care.
- Payors: Use market insights and relationships with hospitals, providers and health systems to institute programs (e.g., wellness) that address populations. A shared view of population dynamics and collaboration with providers is important.
Create and administer new care models:
- Hospitals: Providers should reorient themselves to support a more holistic approach to patient care. This is important as hospitals establish their role in ACOs, and as the Medicare ACO compliance mandates take effect.
- Payors: Experience working with providers makes insurers equipped to establish effective care choreography (e.g., coordinating health and wellness initiatives among hospitals, doctor practices, ancillary care providers, post-acute settings, etc.).
Institute Incentives Focused on Holistic Patient Care:
- Hospitals: To serve the patient across the continuum of care, many hospital executives are considering acquisitions, joint ventures and alliances to create a cohesive heath ecosystem that aligns hospitals, health centers, primary care and specialty physicians more closely. They also need to consider the risk/gain sharing models that establish appropriate financial motives among participants.
- Payors: As bearers of financial risk, payors can work with ACOs to develop and implement new risk management strategies as alternative payment models are introduced (e.g., revisiting capitation, gain sharing, bundled payments, etc.).
Ensure Seamless Transition of Care:
- Hospitals: Controlling care transition is a key issue around hospital re-admissions due to poor post-discharge planning and coordination in the next care setting. Given the focus on readmission reduction by the Centers for Medicare & Medicaid Services (CMS) and other payors, future reimbursements will be linked to a hospital’s ability to reduce readmissions. This requires improvements to care transition and accountability beyond the hospital walls.
- Payors: By working with providers to deploy new and existing care models, payors can improve the quality of care and reduce costs linked to poor care transitions. Several ACO pilots have pursued the transitional care model, creating and coordinating care among providers and payors.
- Hospitals: The link between quality, outcomes and reimbursement, means hospitals have an opportunity to innovate by tracking quality and cost metrics. For example, provider quality measures (e.g., Healthcare Effectiveness Data and Information Set [HEDIS]) underpins the metrics used for Medicare Advantage (MA) Star Quality ratings. Hospitals must track and improve the measures that will influence their reimbursements.
- Payors: The Medicare Star Quality rating for MA insurers provides a measure of an insurer’s quality and member satisfaction. Quality ratings are an indicator of the quality of care, access to care, responsiveness and beneficiary satisfaction provided by the plan. However, because the measurements used to determine Stars are linked to provider performance, MA plans are using varying approaches to change provider behavior