Understanding Patient Centered Medical Homes and Accountable Care Organizations: Part 1 of 2

I’ve been blogging about patient centered medical homes (PCMHs) for the past five years and accountable care organizations (ACOs) for the past two years. In this post, I discuss how these healthcare delivery models are similar and where there are significant differences. In a follow-up post, I will explain why we need both.

According to the American College of Physicians, a PCMH is:

...a model of care that puts the needs of the patient first. The medical home is the base from which health care services are coordinated to provide the most effective and efficient care to the patient. This includes the use of health information technology, the coordination of specialty and inpatient care, providing preventive services through health promotion, disease management and prevention, health maintenance, behavioral health services, patient education, and diagnosis and treatment of acute and chronic illnesses...Each patient has an ongoing relationship with a personal physician trained to provide first contact, continuous and comprehensive care. The medical home is responsible for providing for all the patient's health care needs or taking responsibility for appropriately arranging care with other qualified professionals. The personal physician leads a team of individuals who collectively take responsibility for the ongoing care of patients...Quality and safety are the hallmarks of the medical home. Evidence based medicine, health information technology, and clinical decision support tools guide decision making to support patient care, performance measurement, patient education, [whole person orientation] and enhanced communication. Ensuring the coordination and comprehensive approach of the medical home model over time will improve the efficiency and effectiveness of the health care system and ultimately improve health outcomes (Reference).

The ACO model, on the other hand, is loosely define and has different sub-models. According to a recent article in ModernHealth titled “Forging the way: ACOs taking hold despite loose definitions,” an ACO is:

...a fashionable name for a loosely defined fix for U.S. healthcare, are the center of debate, gossip and conjecture among policymakers and the healthcare leaders. But the murky state of the model and poorly received draft regulations intended to clarify the sketch included in the healthcare reform law have not deterred plans among some hospitals, medical groups and payers to…reduce medical errors and waste with financial incentives for quality and lower costs…[by] more closely coordinat[ing] medical care. Markets with competitive or highly independent providers would likely need more time and options to develop accountable care than large health systems with an existing network of employed physicians…Providers who agree to join these endeavors are vulnerable to costly missteps that could put finances and patients at risk…Success will depend on several factors…including hefty financial incentives tied to quality measures and freedom for patients to choose providers (Reference).

ACOs can also be described as:

…vertically integrated organizations of care, which are at minimum composed of primary care physicians [PCPs], a hospital, and specialists…The intent is to coordinate care under the auspices of one organization…[and] providers are held directly responsible for the health of their patients and are evaluated based on their effectiveness, efficiency and quality of care in treating patients. [P]rovider members of ACOs work together across all of the specialties to develop care delivery programs which focus on outcomes and coordinating care…ACOs encourage physicians and hospitals to integrate care by holding them responsible for quality and cost (Reference).

Similarities between a PCMH and ACO

Based on these definitions, PCMH and ACO models both attempt to increase healthcare quality and reduce costs (i.e., deliver high value products and services) by (a) coordinating care, (b) being accountable for the care’s quality and efficient delivery, (c) having a strong primary care core, and (d) consolidating multiple levels of patient care.

According to a recent NY Times Op-Ed piece titled “Cut Medicare, Help Patients,”professors Emanuel and Liebman explain how PCMHs and ACOs provide “seeds of a solution” to controlling Medicare spending by enabling the country to take “a path to smart cuts” by focusing on the:

…need to stop paying for wasteful procedures…and empower doctors, nurses and hospitals to provide higher-quality and more efficient care… these reforms allow [bundled] payments…based primarily on the number of patients cared for and the quality of that care rather than on the volume of services provided [and can] eliminate spending on medical tests, treatments and procedures that don’t work — or that cost significantly more than other treatments while delivering no better health outcomes. And they can be made without shortchanging patients…Smart cuts can also be achieved through better coordination of patient care.

These smart cuts would be an antidote to the “…ill-conceived cuts that…got serious consideration in the recent debt limit negotiations.” These ill-conceived cuts include: (a) Meat-cleaver cuts hack spending indiscriminately…across-the-board”; (b) “Cost-shifting cuts don’t actually reduce health care spending; they just shift costs from the government to the private sector;” and (c) “Penny-wise, pound-foolish cuts reduce current spending by a little but raise future costs by a lot. Raising co-payments for office visits and medications is a good example. Both PCMHs and ACOs would receive financial incentives for controlling care costs and improving quality:

• "The incentives of the ACO are clearly different from the current fee-for-service reimbursement system. The focus of the ACO is to streamline its processes and care while exceeding the norm on quality and outcomes. If the organization spends less than projected, all members of the ACO share in the bonus payments thereby incentivizing effectiveness and efficiency. If, on the other hand, an ACO underestimates the cost of operation, the providers will earn less, thereby institutionalizing ‘accountability.’” (Reference).
• Different financial incentive models for PCMHs are just beginning to emerge. There are a few pilot projects of financial incentives for PCMHs. For example, (a) Health Plan of Michigan has announced an incentive program that encourages providers to become PCMHs by providing financial assistance during the practice certification phase (Reference; (b) six health plans in New York are paying $1.5M in incentives to create medical homes (Reference); and (c) the multi-state Safety Net Medical Home Initiative (Reference).

 PCMH and ACO Differences

While PCPs are core to the care delivery process in both models, a single independent PCP practice heads a PCMH; this is unlike an ACO in which many coordinated PCP practices working together headed a single organization that is typically a hospital or health plan. That means a PCMH is accountable for care cost and quality rendered by one PCP and the specialists treating a particular patient. In contrast, an ACO is accountable for care delivered across multiple PCPs, specialists and hospitals.

Other differences include the following ...

In an ACO, providers form a “tightly-coupled” network in which everyone operates under the same “global standards” by using the same preferred practice guidelines, health IT and centralized communications. This can:

• Streamline central management and control of patient information
• Promote “top-down” (hierarchical) decision making in which “weak voices” (i.e., people not high in the hierarchy) do not have much influence in how things are to be done
• Reduce clinician autonomy and empowerment.

In contrast, each PCMH is a “loosely-coupled” network of PCPs and specialists with its own “local standards” for clinical processes, health IT and point-to-point (decentralized) communications. This can:

• Provide personal management and control of patient information “owned” by each clinician
• Promote collaborative “bottom-up” decision making in which all involved clinicians have a meaningful say in how things are to be done
• Increase clinician autonomy and empowerment.

In my next post, I’ll discuss why both PCMHs and ACOs have an important role to play, as well as how they can operate within a health information exchange (HIE) to emerge clinical knowledge that is useful to everyone.

Healthcare Reform Models Focusing on Value to Consumers - Part 1

Many important things have been happening in the healthcare industry. What I found most exciting is the recent focus on establishing and supporting:

1. Patient Centered Medical Homes (PCMHs)
2. Accountable Care Organizations (ACOs)
3. Meaningful financial incentives models for clinicians and organizations demonstrating care quality improvement and cost control (i.e., cost-effective healthcare delivery bringing value to patients/consumers).

PCHM

I've written about the PCMH model several times over the past four years (see this link). A PCMH is, in essence, a physician practice headed by a primary care physician, which provides coordinated care through collaborating interdisciplinary teams. These groups of sick-care and well-care practitioners focused on delivering high-quality preventive care and effective chronic disease management focused on demonstrating positive patient outcomes.

ACO

An ACO, which goes hand-in-hand with the PCMH, is a related model that focuses on "…the alignment of incentives and accountability for providers across the continuum of care" [Reference]. Together, the PCMH and ACO "…are helping organizations to create systems where care delivery is performed by a team of professionals led by the primary care physician and are held accountable for the care they provide…[T]he patient and the family are the major focus of the program. Engaging them into the process is key to the success. The programs that have been successful have [been] identifying patients at risk and developing a coordinated plan with the help of a multidisciplinary team" [Reference].

Financial Incentives: Pay for Value

Financial incentives used in performance-based accountability systems (such as the PCMH/ACOs) have been found to help improve performance, resulting in better outcomes (more effective and efficient care). "…But creating an effective performance-based accountability system requires careful attention to choosing the right design for the system, which must be monitored, evaluated and adjusted as needed to meet performance goals" [Reference]. And, I'd add, the incentives must be great enough to matter.

For example, "pay for performance" (P4P) programs that give small financial incentives result in only modest care quality improvements since the potential financial reward represents only a small percentage of the overall physician pay and thus do not serve as a strong incentive. This doesn't surprise me. As I wrote three years ago at this link, we ought to be focusing on transforming from P4P to a "pay for value" (P4V) approach that rewards providers who deliver high-value care to patients/consumers that promotes the cost-effective prevention and treatment of illness, dysfunction and distress. Dealing with such a complex and controversial issue is certainly a challenge.

In any case, the three inter-related transformational models discussed above hold great promise! They provide useful approaches for improving our dysfunctional healthcare system. These strategies and processes are consistent with the Patient Centered Value Chain I wrote about three years ago at this link.

A key question remaining is: How should P4V be implemented so it fosters and supports PCMH/ACOs through adequate incentives and meaningful use of health IT?

Affordable Care Act

The Federal government's Affordable Care Act offers answers to this question, although finding a solution is made more difficult--as stated eloquently by Karen Davis of the Commonwealth Fund--because the healthcare industry:

…is not like markets for other goods and services. Information on prices is not typically available, decisions…are often made in an emergency, and patients lack knowledge about the value of diagnostic and treatment services…or where to go for the best care with the best prospects for full recovery, functioning, and quality of life.

Nevertheless, the Affordable Care Act offers a solution by presenting:

...important provisions to increase access to information on the quality of physician and hospital care and establish multi-payer databases that will provide a more comprehensive picture of patterns of care across providers. It also begins to address the imbalance between primary and specialty care by increasing primary care payment rates under Medicare and Medicaid. [It seeks]…new ways of paying for and delivering health care, including 'bundled' methods of payment to encourage providers to work together across health care settings…[and] rewarding those who offer appropriate, high-quality, and efficient care.

These initiatives represent a move away from the current fee-for-service system…[and] can help improve transitions in care from one provider to another and one care setting to another. Many errors occur during these hand-offs and patients often experience frustrations due to inadequate communication among providers involved in their care. These initiatives are one important step in the evolution of a new payment system that will provide incentives to achieve the best results…and in doing so achieve savings from the elimination of wasteful, duplicative, or avoidable treatment.

[In addition to changing payment methods]…new health care organizations that are accountable for both patient outcomes and the resources devoted to care will need to be formed …[and supported with] better information, tools, and technical assistance to ensure that essential services are provided efficiently while quality, innovation, productivity, and prevention are enhanced. Safeguards will also be needed against potential under-provision of care or exercise of undue market power [Reference].

In my next post (part 2), I examine various financing models for paying for the kind of coordinated, high quality, affordable care PCMH/ACOs can deliver.