Panel III: Building an Accountable Care Organization—What Services Do You Need, What Should You Do Without, and What is the Impact on the Physician?


Marina Romani, November 13, 2015

Moderator: Robert Alpern – Dean and Ensign Professor of Medicine, Yale School of Medicine

  • Robert Berenson – Institute Fellow, Urban Institute
  • Michael Chernew – Leonard D. Schaeffer of Health Care Policy and Director, Healthcare Markets and Regulation Lab, Harvard Medical School
  • Cecilia C. Montalvo – Vice President of Business Development, Kaiser Permanente
  • William Sage – James R. Dougherty Chair for Faculty Excellence, University of Texas School of Law, Professor of Surgery and Perioperative Care, Dell Medical School
  • Paul Taheri – CEO of Yale Medical Group and Deputy Dean, Yale School of Medicine

Commentator: Harlan Krumholz – Harold H. Hines, Jr. Professor of Medicine and Director, Yale–New Haven Hospital Center for Outcomes Research and Evaluation, Yale School of Medicine

Robert Alpern kicked off the discussion by defining an ACO: a healthcare organization that ties payment to quality and cost of care.

The first panelist was Robert Berenson, who noted that although we often discuss a dichotomy between competition and regulation, market-based and regulatory solutions are not mutually exclusive. The state of Maryland, for example, controls rate-setting of hospital unit prices concurrent with robust competition between hospitals. Democrats and Republicans agree on a national commitment to move from volume-based to value-based payment. With a 30% spread between the 10th and 90th percentile in service use across geographic areas, and at least a 100% spread in price, we still need a solution. Rather than exclusively emphasizing a goal of restraining spending increases regardless of the spending baseline, Berenson advocates instead for focusing on the convergence of organizations around a community average. This would reduce baseline spending for high price organizations, and is a way that ACOs could be an engine of change for addressing price.

The second panelist, Cecilia Montalvo travels around the country and sees organizations that would prefer not to be fee-for-service. However, shifting away from the FFS model remains challenging, and only a small fraction of these organizations’ business is in ACOs. Montalvo described ACOs as “unicorns,” conjuring up a slightly different image to everyone. For example, simply having a sponsor who takes an upside if physicians lower their costs will not change the way that physicians practice or create a collaborative team-based system. In describing the Kaiser model of multispecialty group practice, Montalvo emphasized the importance of culture and infrastructure: ACOs alone are only a small step. Fragmentation reduces quality and affordability; consolidation, on the other hand, eliminates fragmentation, resulting in better quality of care for consumers.

Paul Taheri drew on his personal experience to explain what is happening at the ground level. Medical groups themselves are undergoing a lot of change: consolidation, transparency, shifts in roles, funds, and decision-making. This puts pressure on older governing processes in medical groups. In this transition period, medical groups remain focused on maintaining the doctor-patient relationship. High-level changes begin at the lowest level, with providers focusing on clinical integration, health information technology, and quality metrics. Some key issues in implementing ACOs involve difficult decisions in rationalizing care: What should be done? Where? Who decides? Physicians have a heightened obligation to deliver excellent care to ACO patients, particularly since those patients have less choice to receive care elsewhere. Implementation of these transformations will require a lot of trust across the continuum of care, between providers, payers, and employers.

William Sage discussed generational change in physicians. Each generation of health reform has tried to capture the enormous trust that society places in physicians. Over the last 50 years, there has been a transformation in physician thought leaders. Kissick, who viewed health policy as an “iron triangle” of access, cost, and quality, had hoped for a definitive political settlement as a solution to healthcare reform. Berwick, on the other hand, views modern healthcare instead as a “triple aim” of improving the patient experience of care, improving the health of populations, and reducing the per capita cost of health care. Berwick instead emphasizes incremental change from within, which can be led by physicians and is compatible with the ACO model. Whereas the traditional generation of physicians is wary of ACOs, emerging physicians’ perspective has been shaped by the transformation in medical education over the past 5-10 years. Today’s physicians differ in how they learn (through building portfolios, flipped classrooms, competencies and milestones, and interprofessional education) and in what they learn (teamwork, electronic health records, population health management, and health system redesign). This emerging generation of physicians is eager and capable of working toward the Berwick triple aim.

Michael Chernew discussed incentives in ACOs. ACOs differ from HMOs, PPOs, and other models in that people are attributed to them, they do not set premiums, they do not control benefit design, patients can go anywhere, and they serve both ACO and FFS patients. Several years out, ACOs were saving around 10%, compared to around 1% in Medicare. Moreover, evidence is strong that quality does not decrease in ACOs. Organizations share savings associated with efficiency and reduced utilization to avoid costs that are inherently avoidable—everyone wins. Chernew discussed hospital-based ACOs, which have the potential to save the entire price of a hospitalization, but not without a cost to the participating organization. For example, a hospital readmission reduction program might save money by way of ACO patients while losing paying FFS patients. Whether hospital-based ACOs are better than incentives to save in a large physician base is unclear. However, we do know that ACO models look particularly attractive given the alternative. These models allow organizations that meet publically desirable goals to capture the associated efficiencies.

Commentator Harlan Krumholz advocated focusing on a vision for the future, patient rights, and the experience of front-line providers.

In questions and answers, panelists engaged with the difficulty of measuring quality. Panelists were optimistic about the prospect of developing good quality measures. Taheri, Krumholz, and Chernew advocated giving up on the idea of rating physicians, and focusing instead on the accountability of institutions and on a measurement system. Alpern posed a question regarding the difficulties for physicians facing dueling incentives in this time of transition—half a physician’s patients may be FFS while the other half are ACO. Montalvo and Berenson noted that provider incentives have not yet significantly changed; perhaps such change will occur around 30-40% ACO patients. Chernew and Sage stressed the importance of big-picture incentives with a clear direction. Such incentives are less effective in a more fragmented market. A new generation of physician leadership will help further this transition. In responding to other questions, panelists remarked that today’s model is likely to be more flexible, more well-run, and better for future physicians to practice.

Although the panelists focused on different aspects of ACO implementation and development, they shared optimism for the future of ACOs and a vision of a flexible model engrained in a culture of trust and accountability.