Accountable Care Organizations 101

by Chelsa Burke

Introduction to the Affordable Care Act (ACA)

Despite having the highest per capita health care spending, the United States has poor overall health care quality. This environment has lead to the recent sweeping changes in the country’s health care system. The ACA attempts to address many of the most significant issues including increased access to care for many Americans and a drive for improved quality and reduced costs. Accountable Care Organizations (ACOs) were introduced as a part of the ACA and have been driving this push for improved quality and reduced costs.

What is an ACO?

A common misperception is that an ACO refers to a specific entity, such as a hospital, an Integrated Delivery Network, or a physician practice. It is more accurate to define an ACO as a contract across a network of these types of providers. ACOs are formed by groups of providers that collaborate on patient care across a variety of care settings to lower health care costs, improve quality outcomes, and improve the experience of care. The premise of the ACO is that each of these results can be obtained by moving away from volume-driven fee-for-service-based reimbursement and toward payment models that reward care coordination and quality outcomes.2

The Evolution of ACOs

Since 2010, the total number of ACOs has grown quickly, with the majority of growth occurring in the last few years. On December 23, 2013, the Centers for Medicare & Medicaid Services (CMS) announced an additional 123 ACOs were selected to participate in the Medicare Shared Savings Program (MSSP), bringing the total to 366. ACO growth has also continued apart from the Medicare program, with 606 total ACOs now existing in the United States as of December 23, 2013.2

As we have heard multiple times in the various ACO conferences and webinars we have attended, “If you’ve seen one ACO, you’ve seen one ACO,” meaning each ACO has a unique infrastructure. Commercial ACOs and Medicaid ACOs have similar objectives to MSSP ACOs, but they have more flexibility in designing accountable care contracts. Some commercial and Medicaid ACOs mimic the shared savings model of the MSSP, but others have moved to full or partial capitation models, bundled payments, retainer agreements, and pay-for- performance incentives.2 Many ACOs will have multiple contracts with multiple payers, sometimes using the same MSSP quality measures across payers. Other times, ACOs may be tracking different quality measures, depending on payer contracts.

ACOs and the Future of Pharma

HRM’s team has mainly been focused on trying to answer one overarching question, “What do health care reform and ACOs mean for the future of Pharma?” The answer to this question is complex and ever-changing. The broad answer is that Pharma needs to be able to demonstrate outcomes and be a leader in the ACO space. Big-data experience and data transparency is increasingly valuable in the evolving outcomes-based industry. Pharma needs to be able to understand ACO objectives, partner with large ACOs by taking on a more consultative sales approach, and focus on influencing ACO systems via ACO executives rather than individual physicians.

Regional Marketing Relevance?

Since all ACOs will be structured differently and have different objectives, ACO identification and targeting is best executed at a regional level. Marketing at a regional or local level will ensure appropriate messaging to ACOs and will be targeted toward their specific quality measures and individual goals. Penetrating an ACO takes a significant amount of time, planning, and dedication, but it is the key to success in the evolving heath care environment. HRM is here to help with ACO trainings, assessments, strategies, and tactics. Contact us today to see how we can help you succeed with ACOs.

The Pursuit of Expertise

As the ACA kicked into gear in 2010, HRM formed an elite team to stay up-to-date on healthcare reform trends and opportunities for Pharma. Over the years, this team has participated in multiple health care reform—specific conferences, webinars, and other research opportunities. The vast amount of knowledge acquired has resulted in multiple health care reform—related projects at HRM and countless consultations with clients. HRM is committed to continuing to pursue this expertise and to sharing it with our clients.

Sources: 1) UC Atlas of Global Inequality. Health Care Spending. Accessed June 16, 2014. 2) Health Affairs Blog. Accountable Care Growth in 2014: A Look Ahead. http://healthaf- Accessed June 16, 2014.

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