It is no secret that the ACO movement will have a profound impact on provider approaches towards care coordination, provider-to-provider collaboration, and patient engagement.  An important component in the formation and success of ACOs will be the introduction of value-based reimbursement where providers will be placed at “risk”; making them responsible for overspending and rewarding them across certain quality measures.

Several fundamental industry changes that are direct result of this “risk” shift have been discussed in previous posts, including the emergence of technologies that support performance tracking and clinical decision making as well as technologies for shared decision-making and information collaboration.

• Closing the Chasm between Cost and Quality in Healthcare
• A Simplified View Of The Healthcare Informatics Landscape
• HHS Announcement Signals Start of ACO Services Race
• Linking Value Based Purchasing & the Realities of Tracking Care Provider Accountability
• Can Improvements In Post-Acute Care Coordination Reduce Unnecessary Hospital Admissions?

We are also looking at the potential alignment of ACOs and post-acute providers in a value-based payment environment. In the new payment environment, it will be imperative for ACOs to create an integrated system of care coordination among providers and partners that includes initiatives to aggressively monitor member patient health and drive care outside of inpatient settings. In doing so, the primary focus will be:

• Avoiding high-cost care episodes resulting from poor risk identification and member health monitoring.
• Delivering routine care and preventive services in low-cost, efficient settings.

While post-acute providers are unlikely to serve as an organizing partner of an ACO; they provide a tremendous value-add to ACOs by enabling chronic care management, extending care coordination efforts, and facilitating the provision of care in lower-cost settings (through home health or hospice services).

The most likely ACO / post-acute provider strategies that will emerge in the evolving ACO environment will resemble the following:

ACO / Provider Partnership to Provide Services to Entire Population – similar to an exclusive or preferred partnership; in which ACO contracts with a provider (or multiple providers) to provide post-acute services to the entire member base.

ACO / Provider Partnership to Address Specific Concerns or Cost Drivers – ACO contracts with provider to provide specific post-acute services to address key concerns and / or cost drivers (i.e., readmissions, drug adherence, and emergency department utilization).

ACO / Provider Partnership to Treat Specific Members – ACO contracts with provider to provide targeted post-acute services to a specific subset of members. For example, an ACO many contract with a home health provider to provide standard care / monitoring services to members with diabetes.

The playbook for ACOs is relatively the same despite the partnership arrangement; all scenarios involve a heavy emphasis on providing the necessary preventive and follow-up care in lower cost settings in order to control costs as well as to minimize the impact high-cost care episodes.

A recent example of how these emerging ACO / post-acute provider relationships might unfold is through CMS’ Pioneer ACO Program, an initiative designed to test the impact of different payment arrangements on organizations operating as ACOs or similar arrangements in controlling Medicare spending. Michigan Pioneer ACO (Michigan ACO) is a partnership between the Detroit Medical Center (DMC) and its physicians and was selected to introduce a specialized case manager pilot program identifying terminally ill patients that require customized care at home. To operate the program, the Michigan ACO signed a three-year contract Hospice of Michigan, where through its HOMe subsidiary, terminally ill patients are provided with comprehensive home medical services. . The goal of this pilot program is to reduce unnecessary costs associated with end-stage illness (HOMe also has contracts with several other leading Michigan payers, including Blue Care Network, Priority Health and United Healthcare, to provide similar services).

The Michigan ACO example highlights the growing payer / ACO acceptance of the vital role that post-acute providers play in controlling healthcare costs (as well as their willingness to form partnerships in order to distribute these services effectively).  In the case of the Michigan ACO, where efforts were directed towards controlling end of life spending through hospice care, the program is especially significant given that studies have shown that end of life services account for 10 percent of the nation’s $2.6 trillion health care budget. Furthermore, for those aged 65 and older, the last 12 months of life account for 27 percent of total costs. Given the potential spending burden that these types of conditions create and the resultant pressures that would be placed on an ACO, it is no secret that the post-acute space will be a critical focus area for ACOs and similar risk-bearing entities.

As the ACO movement continues to take shape and build momentum over the next few years, it is likely that subsequent ACO / post-acute provider partnerships will emerge as these providers address a critical (and costly) part of the care continuum.

Let us know what you think.

Joe Long