PoV discusses the different ACO models and key business capabilities required for implementing in a healthcare payer organization

1. Insights
Accountable Care
Do you have the right plan?
- Siva Nandiwada
The healthcare sector in the United States is going through a turbulent period driven by ballooning costs and the
contentious Patient Protection and Affordable Care Act (PPACA). What’s more troubling is that despite spending more
than double the OECD (Organization for Economic Co-operation and Development) average on healthcare, the U.S. is one
of the only three nations in this group to lack universal health coverage.
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2. Why Accountable Care
The current healthcare model, which reimburses providers with a fee for services
rendered, is seriously flawed in that it rewards the volume of treatment rather than its
The healthcare industry is wrestling quality. Accountable care does exactly the opposite by establishing an outcome-led
with multiple challenges around model of reimbursement in which both payers and providers share risks (penalties)
rising costs, inconsistent quality and as well as rewards (incentives) that are linked to the cost savings achieved. Second,
inadequate access to care through accountable care aims to plug the holes and redundancies in care management
concerted transformation programs. with an integrated approach. Research suggests that poor care coordination wastes
These initiatives are driven by the between 5 and 6% of total U.S healthcare spend, a loss amounting to over US$ 25
considerations of affordability, wellness billion. An integrated care management model will go a long way in improving
and patient-centricity. In other words, efficiency. Last, accountable care will improve data transparency and accessibility
the goals of transformation are to: by means of electronic health records and the exchange of data among providers.
• Enable the delivery of quality
healthcare at the right (read
Accountable Care Models
transparent and fair) price;
There are several models of accountable care broadly determined by the primary
• Improve disease prevention and
sponsor. In addition, there could be variations, based on the implementation of core
patient well-being, and
principles. However, risk sharing is common to all.
• Uphold patients’ interest by
empowering them and making Provider-led ACO
both payers and providers
Healthcare providers are the biggest supporters of accountable care. A recent study
accountable for outcomes.
found that two out of three identified ACOs were backed by hospitals or hospital
A survey conducted by Infosys Public systems. The main reason behind this finding is that hospitals have the financial
Services in October 2011, highlights and infrastructural resources required to practice accountable care, not to mention
that close to 40% of payers plan on the support of physician groups, which are participating in various health plans.
implementing accountable care-
related solutions by the end of 2012. In Payer-led ACO
December 2011, the Wall Street Journal
Large players, some of whom have taken the initiative to create new accountable
published the results of a survey
care models, mainly drive this type of organization. For example, several “Blues”
according to which 15% of hospitals
have created an “Alternate Quality Contract”, which aims to slow down the trend
were already engaged with an ACO
of medical expenditure in the next three to five years. Other national payers have
(Accountable Care Organization)
launched a Collaborative/ Comprehensive Care initiative, and have enabled their
and another 40% were likely to do so
processes and systems to contract with different ACOs and Patient Centered Medical
by 2013. These numbers indicate a
Homes (PCMH).
dominant and mature trend towards
accountable care.
Employer-led ACO
Employers can choose between different ACO models or create one that best serves
the needs of their workforce. For example, a self-funded employer could sponsor
and organize its ACO, just as other organizations with their own health plans or
on-site clinics, have done. Another employer might choose to contract directly
with a provider system with an ACO. Others may want to access an ACO through
a health insurer.
PCMH
This approach shares some of the principles – such as care coordination and payment
reform – governing ACOs, yet differs from them in other ways. While ACO models
share risk as well as reward, PCMH models do not levy any penalty on providers.
PCMHs focus primarily on preventive care driven by Primary Care Providers (PCPs)
in partnership with the care coordination team, in contrast to ACOs, which focus on
the entire continuum of care including PCPs specialists, hospitals, labs etc. Payers
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3. drive care coordination in the PCMH model, whereas
providers do so in the ACO model. Interestingly, a couple
of Blues are in the process of implementing a hybrid PCMH
Implementing Accountable Care – Key
+ ACO model. Business Capabilities
Provider Identification and Enrollment: Payers must first identify
Government Payers the providers to be enrolled based on their business objectives. In
Introduced in PPACA, the Medicare Shared Savings the PCMH model, payers, who have to contract with PCPs, need a
program was formed to facilitate coordination and mechanism to track referrals. However, in an ACO model, payers
cooperation among providers to improve the quality of typically engage with PCPs as well as specialists, hospitals and
care for Medicare Fee-For-Service (FFS) beneficiaries and laboratories to drive efficiencies and improve quality across the
reduce unnecessary costs. care continuum.
Designed for organizations with experience operating
as ACOs or in similar arrangements, the Pioneer Model Care Coordination / Team Setup
will provide ACOs that are successful in achieving shared In the PCMH model, payers need to plan care coordination, whereas
savings in the first two years the opportunity to move into in an ACO model, this responsibility as well as ownership rests
population-based payment in the third. The Pioneer Model with providers.
will also require participating ACOs to engage in similar
arrangements with commercial and other payers. Stratification
The most common approach to risk stratification of the population
Implementing Accountable Care – Key is based on claims, which traditionally comprised medical claims
Steps but now also includes pharmacy claims. Behavioral health data
may also be integrated to improve the accuracy of stratification.
Like any other transformation, the implementation of
accountable care is accomplished in three broad phases –
Attribution
planning, implementation and evaluation. Before getting
into technology infrastructure and analytics, it is important Payers can choose one of many attribution methodologies, such
to put the basics in place: identifying business objectives, as the Dartmouth Model, the Employer Group based model or
setting up the provider-payer collaboration structure, and the PCP based model. They also need to establish mechanisms to
establishing performance measures and contracts. manage additions and terminations to the attributed population.
Examples of business objectives include improving
provider accessibility, reducing re-admissions and
Performance Measures Definition
emergency visits and enhancing engagement between In an ACO model, payers need to identify population specific
patients and providers. There is more flexibility in care performance measures including potential incentives and
management, which was traditionally the preserve of penalties. In the PCMH model, payers need to identify key cost
providers. Payers might collaborate with providers, or and quality measures and establish shared rewards.
under the ACO model, loan the service to the ACO and
Performance metrics include clinical quality measures, population
get paid for it.
measures, patient engagement and experience, healthcare IT
The source of funding determines implementation. When capabilities, etc.
payers contract with different entities in different markets,
Budgets: Payers can predict costs based on historical claims data
the requirements of business processes and systems
and set spending targets after assuming a certain amount (typically
undergo a change. Therefore, adopting a phased approach
in percentage terms) of savings.
with nimble processes and architecture helps scale up for
succeeding phases.
Care Plan Management
The shift towards accountable care is a years-long
When payers follow an ACO model, most functions around care
transformation journey, which requires patience,
management become the responsibility of the ACO. Providers
sponsorship and the knowledge accumulated in previous
create the care plans and track them without much involvement
cycles. It also requires certain business capabilities, which
from payers. In the PCMH model, the payer organization has to set
are listed in the following section.
up mechanisms such that PCPs create the care plan, monitor and
track patient care with appropriate incentives.
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4. Implementing Accountable Care
Key Technical Capabilities
Meeting these business capabilities calls for some other technical
capabilities. First of all, the entity needs portals and mobility
capabilities to enable effective collaboration between various
stakeholders, including providers and members. Integration and
process orchestration is essential for care coordination.
Data and analytics are critical components, since a significant
number of business capabilities depend on leveraging data, setting
goals, tracking and reporting. A “single source of truth” is needed
to improve the accuracy of analytics.
Analytics has a role to play in member attribution, health risk
assessment, care plan analysis and performance measurement.
Both PCMH and ACO models require budgets to be set at member
or population levels based on historical patterns.
Accurate reporting improves collaboration and operational
efficiency. Also, as the ACO process matures, unified communication
capabilities will improve collaboration between providers, patients
and other stakeholders.
About the Author
Siva Nandiwada
Associate Vice President, Client Relations - Healthcare, Infosys Public Services
Siva Nandiwada is responsible for client relationships in Healthcare. He has over 14 years of experience in business consulting,
managing senior client executive relationships, strategic planning, operations planning and marketing, and managing large scale
technology-led business transformation programs. He is an alumnus of IIM, Ahmedabad, India.
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