Accountable Care Organizations: The New Normal?

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It is up to oncologists to honestly and transparently work for the benefit of the patient with cancer, but simultaneously understand that the status quo is over, and quality-based care that promotes improved outcomes will be the new normal.

—Richard J. Boxer, MD, FACS

The accountable care organization was introduced into our lexicon during a public meeting of the Medicare Payment Advisory Commission in 2006, and the term became ubiquitous when it was specified in the Patient Protection and Affordable Care Act of 2010. After the November 6 election, accountable care organizations became a fact of life. The principle that defines the reason for accountable care organizations is the near-uniform belief that health care in America is fractionated, too expensive, and demands creative reform.

Basic Principles

Through accountable care organizations, the Affordable Care Act envisions the transformation of current volume-based, potentially perverse incentives to overtest and overtreat, to value-based incentives for delivery of high-quality, lower-cost health care. These organizations are designed to coordinate care through a robust system of patient-centered primary care health professionals. However, medical and surgical specialists rapidly have become an integral part of these organizations.

Oncology, which accounts for 10% of health-care expenses, certainly will be impacted. Although the Affordable Care Act described accountable care organizations as a means of coordinating care for Medicare beneficiaries, private insurers are embracing the concept.

So, what exactly are accountable care organizations? Ideally, they are integrated systems of physicians and other health providers that increase coordinated care and improve patient outcomes. They can be independent physician organizations, integrated delivery systems (hospitals and their participating physicians), multispecialty group practices, physician-hospital organizations (nonemployee medical staff), or virtual physician organizations (commonly in rural areas). Theoretically, the money saved by a successful accountable care organization will be shared in certain undetermined percentages by the insurer (including Medicare) and the organization itself (including the doctors).

The Congressional Budget Office has predicted that accountable care organizations will save Medicare $5 billion over the first 8 years, by eliminating unnecessary or redundant procedures, sharing clinical information, and meeting quality metrics. However, the projected budget for Medicare in that same period of time is $6.2 trillion. Thus, the extraordinary effort to create accountable care organizations will save approximately 0.08% of the Medicare budget. This is known by the Congressional Budget Office as “budget dust.” In addition, the estimate of legal and consulting fees to create the existing and near-future accountable care organizations is $1 billion. Already, 20% of the savings is consumed, and the process has just begun.

In further evidence of the money involved, it is estimated to cost $10 million to $30 million to create a fully functional accountable care organization. Who has that kind of money? The answer is commonly, but not uniquely, integrated health systems—ie, the hospitals.

Added Rationale

H.L. Mencken famously said, “When somebody says it’s not about the money, it’s about the money.” Nevertheless, it seems clear that in the immediate future, there is little money to be saved or shared. Thus, the best reason to create and support the accountable care organization concept is for improved patient outcomes. But is there another reason?

Hospital systems have been buying practices at a rapid pace. In 2000, 20% of primary care doctors and 5% of specialists were employed by hospital systems. In 2012, 40% of primary doctors and 22% of specialists are employed. And this will continue until the vast majority will be controlled. It is highly unlikely that this extraordinary aggregation of physicians and the creation of accountable care organizations is a coincidence. Physicians have always been an uncontrollable and independent lot. That, like fragmentation of care and fee-for-service, will soon be a historical vignette.

Oncologists have a lot at stake. Throughout the nation, many practices are being purchased by integrated health systems. This may result in more oncologists integrating their practices into large single-specialty groups to preserve their independence and create outcomes and value-based oncology centers of excellence.

Accountability Question

The question on all physicians’ minds is: To whom are the accountable care organizations accountable? Physicians staunchly fight for the accountability to be to the patient, not the bottom line. Yet, one of the reasons for the Affordable Care Act is the crisis produced by the very system that physicians were central in creating.

There is no turning back. The federal health-care legislation may be slightly modified, but it is the future of health-care delivery. It is up to oncologists to honestly and transparently work for the benefit of the patient with cancer, but simultaneously understand that the status quo is over, and quality-based care that promotes improved outcomes will be the new normal. ■

Dr. Boxer is Clinical Professor at the University of Wisconsin, Madison, and the Medical College of Wisconsin (Milwaukee), and former Professor of Clinical Urology at the University of Miami. 

Disclosure: Dr. Boxer reported no potential conflicts of interest.