Monday, February 10, 2014

What is ACO or Accountable Care Organization? Why is the Healthcare Industry Adopting it?

Published by Pradip Sengupta, CEO of IPS Technology Services

ACO or Accountable Care Organization aims to provide well-coordinated, patient-centered healthcare with the goal of achieving improved health, improved patient experiences and lower costs.   The fundamental premise of ACO is to set up processes and infrastructure to help providers get reimbursed based on outcome (quality) and not based on fees for service (quantity) which is required by the new Healthcare Law when it is fully enforced.  This is why the trend towards adopting ACO by the providers is up as reported by Leavitt Partners, a healthcare consulting firm in Salt Lake City.  According to Leavitt Partners, there are 330 ACOs in operation as of November 2012—up from 164 in 2011. 

To discourage over-utilization, many payers have shifted from fee-for-service compensation, which rewards physicians for treatment volume, to risk-sharing arrangements that prioritize outcomes. Under the new system, when treatments deliver the desired results, provider compensation may be less than before.

So how does an ACO work?  The core of ACO is sharing of information throughout the healthcare continuum by all related parties through effective implementation of Healthcare IT tools and adoption of a well understood care delivery process.  In order to implement ACO successfully and for effective care coordination, a payer-provider partnership is a must and it needs at least the following main components:
  • Electronic Healthcare Record (EHR) tool as the core of the healthcare process continuum
  • Information Registry to record diseases and correlate them with patient groups 
  • Health Information Exchange (HIE) to provide the infrastructure to transfer information from one organization to the next (provider or payer) 
  • Analytics to slice and dice data to derive meaningful results and make informed decision to improve quality and lower cost
  • Interoperability to make sure that the information traveling from one organization to the other using disparate tools can be interpreted to maintain continuity 
  • Messaging a large part of which is communication among different parties providing care to the patient; it also means timely information sharing between the patient and provider
  • Revenue Cycle Management (RCM) establishment of which refers to the entire medical billing process from beginning to end and its effective management 
Implementation of the above features helps providers meet not only ACO requirements but also helps them meet a set of guidelines defined by the CMS for the establishment of ACO under the three year Medicare Shared Savings program.  This in turn will help increase revenue, improve quality of service and also prepare providers for the next decade.   
Additionally, as ACOs continue to proliferate, it will likely soon include an accreditation process that may be managed by the National Committee on Quality Assurance (NCQA). Recently, the NCQA worked with employers, policymakers, providers and patients to establish a program that ensures ACOs meet the needs of patients, consumers, private purchasers and public payers.   
In summary, ACOs are here to stay and it is going to be an immensely important tool to stay in business because the benefits are proving to be real.  It will improve the quality of care and reduce waste as well as help organizations implement value-based care concepts in a step-by-step fashion.    

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