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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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Accountable CareDo you have the right plan?

- Siva Nandiwada

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Why Accountable CareThe 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 quality. Accountable care does exactly the opposite by establishing an outcome-led model of reimbursement in which both payers and providers share risks (penalties) as well as rewards (incentives) that are linked to the cost savings achieved. Second, accountable care aims to plug the holes and redundancies in care management with an integrated approach. Research suggests that poor care coordination wastes between 5 and 6% of total U.S healthcare spend, a loss amounting to over US$ 25 billion. An integrated care management model will go a long way in improving efficiency. Last, accountable care will improve data transparency and accessibility by means of electronic health records and the exchange of data among providers.

Accountable Care ModelsThere are several models of accountable care broadly determined by the primary sponsor. In addition, there could be variations, based on the implementation of core principles. However, risk sharing is common to all.

Provider-led ACO

Healthcare providers are the biggest supporters of accountable care. A recent study found that two out of three identified ACOs were backed by hospitals or hospital systems. The main reason behind this finding is that hospitals have the financial and infrastructural resources required to practice accountable care, not to mention the support of physician groups, which are participating in various health plans.

Payer-led ACO

Large players, some of whom have taken the initiative to create new accountable care models, mainly drive this type of organization. For example, several “Blues” have created an “Alternate Quality Contract”, which aims to slow down the trend of medical expenditure in the next three to five years. Other national payers have launched a Collaborative/ Comprehensive Care initiative, and have enabled their processes and systems to contract with different ACOs and Patient Centered Medical Homes (PCMH).

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

The healthcare industry is wrestling with multiple challenges around rising costs, inconsistent quality and inadequate access to care through concerted transformation programs. These initiatives are driven by the considerations of affordability, wellness and patient-centricity. In other words, the goals of transformation are to:

• Enablethedeliveryofqualityhealthcare at the right (read transparent and fair) price;

• Improvediseasepreventionandpatient well-being, and

• Upholdpatients’interestbyempowering them and making both payers and providers accountable for outcomes.

A survey conducted by Infosys Public Services in October 2011, highlights that close to 40% of payers plan on implementing accountable care-related solutions by the end of 2012. In December 2011, the Wall Street Journal published the results of a survey according to which 15% of hospitals were already engaged with an ACO (Accountable Care Organization) and another 40% were likely to do so by 2013. These numbers indicate a dominant and mature trend towards accountable care.

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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 + ACO model.

Government Payers

Introduced in PPACA, the Medicare Shared Savings program was formed to facilitate coordination and cooperation among providers to improve the quality of care for Medicare Fee-For-Service (FFS) beneficiaries and reduce unnecessary costs.

Designed for organizations with experience operating as ACOs or in similar arrangements, the Pioneer Model will provide ACOs that are successful in achieving shared savings in the first two years the opportunity to move into population-based payment in the third. The Pioneer Model will also require participating ACOs to engage in similar arrangements with commercial and other payers.

Implementing Accountable Care – Key StepsLike any other transformation, the implementation of accountable care is accomplished in three broad phases – planning, implementation and evaluation. Before getting into technology infrastructure and analytics, it is important to put the basics in place: identifying business objectives, setting up the provider-payer collaboration structure, and establishing performance measures and contracts.

Examples of business objectives include improving provider accessibility, reducing re-admissions and emergency visits and enhancing engagement between patients and providers. There is more flexibility in care management, which was traditionally the preserve of providers. Payers might collaborate with providers, or under the ACO model, loan the service to the ACO and get paid for it.

The source of funding determines implementation. When payers contract with different entities in different markets, the requirements of business processes and systems undergo a change. Therefore, adopting a phased approach with nimble processes and architecture helps scale up for succeeding phases.

The shift towards accountable care is a years-long transformation journey, which requires patience, sponsorship and the knowledge accumulated in previous cycles. It also requires certain business capabilities, which are listed in the following section.

Implementing Accountable Care – Key Business CapabilitiesProvider Identification and Enrollment: Payers must first identify the providers to be enrolled based on their business objectives. In the PCMH model, payers, who have to contract with PCPs, need a mechanism to track referrals. However, in an ACO model, payers typically engage with PCPs as well as specialists, hospitals and laboratories to drive efficiencies and improve quality across the care continuum.

Care Coordination / Team Setup

In the PCMH model, payers need to plan care coordination, whereas in an ACO model, this responsibility as well as ownership rests with providers.

Stratification

The most common approach to risk stratification of the population is based on claims, which traditionally comprised medical claims but now also includes pharmacy claims. Behavioral health data may also be integrated to improve the accuracy of stratification.

Attribution

Payers can choose one of many attribution methodologies, such as the Dartmouth Model, the Employer Group based model or the PCP based model. They also need to establish mechanisms to manage additions and terminations to the attributed population.

Performance Measures Definition

In an ACO model, payers need to identify population specific performance measures including potential incentives and penalties. In the PCMH model, payers need to identify key cost and quality measures and establish shared rewards.

Performance metrics include clinical quality measures, population measures, patient engagement and experience, healthcare IT capabilities, etc.

Budgets: Payers can predict costs based on historical claims data and set spending targets after assuming a certain amount (typically in percentage terms) of savings.

Care Plan Management

When payers follow an ACO model, most functions around care management become the responsibility of the ACO. Providers create the care plans and track them without much involvement from payers. In the PCMH model, the payer organization has to set up mechanisms such that PCPs create the care plan, monitor and track patient care with appropriate incentives.

© 2012 Infosys Limited, Bangalore, India. Infosys believes the information in this publication is accurate as of its publication date; such information is subject to change without notice. Infosys acknowledges the proprietary rights of the trademarks and product names of other companies mentioned in this document.

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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.

Implementing Accountable Care

Key Technical CapabilitiesMeeting 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.