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It's always a good indication that a topic has become top of mind when linked to pop culture satire. Anyone that has ever heard the phrase "accountable care organization," (and who in healthcare hasn't these days?) or inserted its briefer counterpart "ACO" into conversation, knows that its definition is nebulous - some may say ever-changing - and the business plan behind it is equally hazy. Ideally, those in the healthcare market will set up an ACO and then (somehow) save money and increase quality of care.

Retired doctor and proficient blogger James Gaulte likened this plan in a recent blog post to the same one used by the underwear gnomes of South Park: collect people's underwear and then (somehow) make money. He also compared it to a strikingly similar plan offered up by WebMD:

Step 1: Provide connectivity and a full suite of services to the healthcare industry that improve administrative efficiencies and clinical effectiveness enabling high-quality patient care.

Step 2: ???

Step 3: Profit.

Though that second step would seem to raise the most red flags, steps one and three should not be discounted. The entire process poses a number of challenges for providers and vendors.

The Doctor's Point of View
Qualifying for an ACO according to the regulations set forth in the Patient Protection and Affordable Care Act is of great concern to providers like Donald W. Fisher, President and CEO of the American Medical Group Association (AMGA), which has recruited 19 provider organizations into its ACO Development Collaborative. "[T]hey may face challenges meeting the minimum of 5,000 Medicare beneficiaries needed for participation," Fisher explains. "They may find initial capital outlay to gear up for ACO participation to be more than anticipated; the hurdles may prove to be numerous, in particular for those who need to bring together many disparate elements under arrangements. Certainly, those who are already well positioned by size and scope of their offerings - many, if not most, AMGA members - will perhaps have some startup advantages."

Fisher also lists securing appropriate provider mix, health information technology requirements, ensuring accountability for quality and applying consistent regulatory standards as provider concerns.

"Legal and regulatory issues related to forming ACOs - including antitrust, physician self-referral, anti-kickback and civil monetary penalty laws - also need further clarification by the Centers for Medicare and Medicaid Services, the U.S. Dept. of Health and Human Services Office of Inspector General, and the Federal Trade Commission," he says.

"Insurers may see ACOs as competition and will want to know how various ACO structures in different healthcare markets might affect the prices and the quality of healthcare delivered to privately insured consumers, as well as to Medicare beneficiaries. Challenges for patients may not become apparent until a full ACO enrollment period of three years is completed for the initial group of ACOs. The same can be said for vendors."

The Vendor's Point of View
Three years may seem like a long time to wait for ACO challenges to make themselves fully known. Healthcare IT vendors, already struggling to keep up with demand for their products and a dearth of qualified employees, are now faced with the challenge of creating, or recreating, solutions that cater to a more integrated-care approach.

"Technology vendors will have to reshape their products to stress population health in order to succeed in the ACO era," says Dr. Richard Hodach, Chief Medical Officer at Phytel Inc., a sponsor of the AMGA's ACO collaborative that provides physicians with technology solutions to deliver timely, coordinated patient care. "For example, EHR vendors will increasingly emphasize disease registries or link with third-party registries to help group practices manage their populations. HIE s will help providers coordinate with patient data from disparate EHR s. Health IT automation tools like Phytel's, which ease the burden on providers and engage patients outside of office visits, will be crucial to ACO success."

Payment is a big challenge for all concerned - patient, provider, payer and most certainly vendor.

"One of the major hurdles [regarding ACOs] is that the payment methodologies conceived to fund ACOs have not been fully defined," explains Alan Gilbert, Vice President of Business Development at AxSys Health Corp., developer of the Excelicare collaborative and coordinated care/disease management/HIE software solution. "While there are changes underway, the majority of care that is paid for in this country is by a OEfee-for-service' methodology, as opposed to by a capitated or risk-based methodology. In addition, the ACO is an emerging model - and one that is not yet fully understood. Vendors must understand that provider and payer needs will evolve and change rapidly.

"Vendors that succeed will be those that understand the underlying principles driving the ACO model, and develop functionality that is truly supportive of those objectives," Gilbert says. "HIT solutions supporting ACOs must be collaborative and interoperable on a scale never before seen in healthcare. Achieving that level of coordination, and packaging it into a user-friendly product that meets the needs of all constituents, will be the biggest challenge facing vendors."

Health IT vendors that currently work with the payer market also understand that collaboration will be key. A number of capabilities currently used routinely by payers will be critical to the success of ACOs, even if those ACOs don't take financial risk, says Dr. Jeff Rideout, Chief Medical Officer and Senior Vice President of Cost and Care Management at the Trizetto Group, which provides healthcare IT solutions to the payer market.

"The current regulations do not require ACOs to accept financial risk; instead, they create a shared savings opportunity," says Rideout. "Even with that, organizations seeking to meet ACO requirements will need to have capabilities that have historically been considered more 'insurance' functions, such as population health management, clinical analytics, network contracting and funds collection and distribution. Some of the initial needs will be simply how to collect payments and distribute them accurately to physicians and other providers working together for the first time.

"Coordinating and enabling the revenue cycle process throughout - across doctors, hospitals, other providers, insurers and consumers - is essentially the underlying engine that will make ACOs work," he adds. "Once those mechanisms are established, analytics, care management and broader population health management capabilities will allow ACOs to consider taking on clinical and financial risk in the future."

Overcoming the Challenges
Needless to say, there are challenges involved in this process. And with clearly defined "rules of the road" at least six months out, if not longer, according to some, ACO development guidelines remain speculative in the short term. But those in healthcare have never let speculation, or challenges like underwear gnome economics, stand in the way of optimizing patient care or growing the bottom line.

Source: Billian's HealthDATA