Meeting the Future Challenges of Building ACOs

Janice Simmons, for HealthLeaders Media , April 22, 2010

Taking lessons learned from physician/hospital organizations, governance issues could surface immediately. In addition, the relationships between primary care providers and specialists have the potential to be an issue. The criteria for physician inclusion or exclusion in the ACO—separate from the issues of credentialing and hospital admitting status—could require considerable thought, according to the study.

Consumer response. Several legislative proposals suggest that patients could be assigned to an ACO based on their primary care physicians. However, patients could be free to see providers outside of their ACOs and could even switch ACOs.

A medical home could serve as an entry point to an ACO. However, unless restrictions are made on provider selection (such as with an HMO), ACOs, payers, and employers may need to capitalize on consumers’ desire for more coordinated healthcare in order to get buy in to the ACO model.

Payments and incentives. No single, agreed upon ACO payment structure exists. The Senate pilot project proposes a voluntary fee-for-service bonus payment—but also adopting capitation if the Senate proposed global payment pilot proves effective.

In the commercial market, health plans may use performance based threshold goals—or milestones—to align payments with provider performance. Health plans would be expected to initiate provider report cards and implement optimal network design—such as open networks versus closed networks or tiered networks—to align provider performance with incentives.

Infrastructure to manage risk. The use of information systems or medical management protocols—plus adherence to state and federal laws—will requires capabilities not usually found within a provider organization. To meet those needs and to manage risk, outsourcing may be necessary.

The "maturation of the ACO model" will necessarily require an "increased willingness to accept substantial risk and effectively manage costs, outcomes and compliance"—all of which should be seamless to patients, efficient for payers and strongly supported by provider, the study noted.

Janice Simmons is a senior editor and Washington, DC, correspondent for HealthLeaders Media Online. She can be reached at

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