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The Role of Independent Physicians in Accountable Care Organizations

Dr. David NaceBy Dr. David K. Nace
Vice President and Medical Director, RelayHealth
Member of TransforMED’s National Advisory Council

The Patient Protection and Affordable Care Act (PPACA) sets clear expectations for reforms in healthcare delivery – improve the quality and outcomes of care while also reducing costs. For small-practice physicians, the law presents a multi-faceted challenge – how to maintain their independence while investing in and adapting to new standards for care, reimbursement and information exchange.

The term "accountable care" is often used to describe the desired outcome of health reform – better care delivery and better overall patient health at lower cost. Accountable care requires multiple providers to function as a virtual single entity or team. Physicians will be more responsible for the outcome of treatment they deliver, and will be expected to work seamlessly with other care providers (hospitals and specialists) to offer care that is more fully coordinated for patients who need it.

Several bodies have published key principles or requirements for accountable care organizations. The PPACA requires physicians to be at the core of accountable care organizations for Medicare, and eventually Medicaid. Because it must have at least 5,000 assigned beneficiaries, a Medicare ACO must have as its foundation a sufficient number of primary care professionals to achieve that patient population.

The American Medical Association (AMA) recently approved 13 principles for how ACOs should be configured and operated. The AMA's principles include voluntary patient and physician participation, the provision of upfront resources to encourage ACO development, and allowance for different payment models, including fee-for-service, capitation, partial capitation, medical homes, care management fees, and shared savings.
Additionally, four primary care physician associations, representing more than 350,000 primary care physicians, recently released a set of Joint Principles for Accountable Care Organizations.  The American Academy of Family Physicians, the American Academy of Pediatrics, the American College of Physicians, and the American Osteopathic Association describe 21 principles to consider when building the administrative structure of an accountable care organization, and how payment should be facilitated.

The joint principles state that primary care should be the foundation of any accountable care organization, and that the Patient-Centered Medical Home model should be adopted by an ACO for building its primary care base. The Patient-centered Medical Home (PCMH) and ACO can be thought of as different views of the same thing – the PCMH being the practice level or "micro" view (the one the patient comes to know, trust, and rely upon), and the ACO being the system-wide or "macro" view.

The Micro View: The Patient-centered Medical Home

The patient-centered medical home (PCMH) combines the core tenets of primary care with the adoption of innovations such as electronic information systems, team-based care, population-based management of chronic illness, a focus on delivering evidence-based medicine, innovative care delivery models such as group visits, and continuous quality improvements for the delivery of care.

Each patient in a PCMH has an ongoing relationship with a personal physician who has been trained to provide first-contact care response, as well as continuous and comprehensive care.  The personal physician leads a team of professionals at the practice level who collectively take responsibility for the ongoing care of patients. The team is responsible for providing for the patient's healthcare needs or for arranging care with other qualified professionals for all stages of life.4

PCMH also focuses on extended access – after hours, weekends, via secure messaging and other technology – and coordination of care across the healthcare continuum.

A significant portion of the preventive and chronic care innovations and care interventions in the PCMH are not covered by payers, including CMS.  The current fee-for-service model encourages procedural services rather than preventive care. To address this issue, PPACA supports piloting a broad range of payment models, and a spectrum of options is possible, ranging from shared savings, pay-for-performance and bundled payments to partial or full capitation.

Experts have estimated that with the proper alignment of payment and quality incentives, global payment methodologies could generate a 20 percent to 30 percent cost reduction while greatly improving care quality.5 To ensure small and rural practices are able to participate, the AMA wants CMS to provide loans, loan guarantees and technical assistance to help with the costs of investing in technology, or costs that may be incurred due to delays in reimbursement as a result of certain payment reforms.6

The Federal Trade Commission has indicated it is open to developing additional safe harbors under antitrust laws through an expedited review process so practitioners have confidence on where and under what situations they can collaborate. The Office of the Inspector General has examined how CMS can effectively use its waiver authority, and both agencies have explored ways to harmonize their regulations.7

For independent physicians, this would present the opportunity to jointly negotiate contracts and payment rates with health plans without concerns over joint price fixing, reduced competition, and other antitrust matters.

The Macro View: Accountable Care and Accountable Care Organizations

Medicare ACOs will be comprised of health care providers that agree to be accountable for the quality, cost, and overall care of Medicare beneficiaries who are assigned to the organization. The statute specifies the following types of providers may enter into agreement with CMS to participate as a Medicare ACO:

  • Physicians and other professionals in group practice arrangements
  • Physicians and other professionals in networks of practices
  • Partnerships or joint venture arrangement between hospitals and physicians or other health professionals
  • Other forms the HHS Secretary may determine to be appropriate

The common element for all accountable care organization is physicians. While a physician group that is unaffiliated with a hospital can be certified as an ACO, a hospital without affiliated physicians cannot. This element of the law firmly establishes the pre-eminence of the physician in care management. CMS is also asking for input as to what care delivery or payment models would be best for smaller practices, such as are often the primary care delivery modality in rural and underserved areas.

There will likely be a variety of collaborative models at this macro level. Some, such as fully integrated delivery systems, will have tight relationships between participating providers. Others, such as clinically integrated health systems where a hospital and local providers collaborate but a formal relationship is not established, will have a less tightly knit relationship. There will be physician-physician models that may include combinations of multi-specialty practices or simply be primary care-based.

In many parts of the country, care delivery currently is disaggregated and uncoordinated. The evolution of accountable care organizations may range from hospital-dominated systems to networks of primary care physicians.  Whatever the arrangement, these organizations will need to provide the operational infrastructure to successfully deliver on accountable care. In all arrangements, physicians will play the key role in finding new ways to save money without compromising treatment.

Examples of Physician-driven Accountable Care Strategies and Initiatives

A number of organizations have sponsored learning or implementation networks that either provide direct technical assistance or opportunities for cross organizational learning. Groups ranging from hospital-based organizations to networks of primary or multi-specialty physicians are taking part.

  • The American Medical Group Association, which represents some of the country’s largest medical practices and independent practice associations, formed two collaboratives in late 2010 to provide technical and other assistance for evolving ACOs:
    • AMGA Development Collaborative: Currently comprised of 19 medical groups, such as the Vanderbilt Medical Group in Nashville, Tenn., and Advocate Physician Partners in Chicago, to assist members in gaining the critical capabilities necessary to become an ACO.
    • AMGA Implementation Collaborative: Convening group practices that are beyond the initial development phase to focus on forming governance and leadership structures, maintaining sufficient investment capital, and interacting with participants from the CMS PGP demonstration project to share best practices in care coordination.

  • The Dartmouth Institute for Health Policy and Clinical Practice and the Engelberg Center for Healthcare Reform of The Brookings Institute have developed an ACO Learning Network of more than 100 health systems and provider organizations. The Learning Network offers practical guidance and support for organizations looking to implement and advance the ACO model in care settings. The network’s activities include a series of webinars, conference calls, and web-based tools that focus on various aspects of the ACO implementation process. Organizations looking for more tailored assistance have the opportunity to participate in an ACO Implementation Group, which involves customized curriculums designed to connect peers with advanced implementation needs.

  • The Group Practice Information Network (GPIN), a network of senior leaders of large multi-specialty physician group practices, is committed to performance improvement in patient care and cost effectiveness. GPIN has launched an ACO Collaborative with the intent of helping members assess ACO readiness, target areas for competency development, and provide collaborative networking and “shared learning” opportunities with member organizations that have highly developed ACO competencies.


3. 20101117.Par.0001.File.tmp/AAFP-ACO-Principles-2010.pdf
4. Neil Kirschner and Michael S. Barr, “Specialists/ Subspecialists and the Patient-Centered Medical Home,” Chest Journal, August 11, 2009




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