Acronyms Beginning with “A”, Please

Perhaps you’ve heard of the term “ACO” or Accountable Care Organization.  And if you live in Massachusetts or are an avid follower of healthcare events, perhaps you’ve heard of the “AQC” or Alternative Quality Contract that Blue Cross Blue Shield of Massachusetts rolled out a few years ago to its providers.

There are some real similarities between them…and I’m not talking about the fact that both are healthcare-related acronyms that begin with the letter “A”.

First, a little bit of information about each of them…

In an Accountable Care Organization (ACO) providers will theoretically create teams of clinicians to manage patients and patient outcomes. (I say theoretically because ACOs are still in an infancy stage.  Some experts have ideas on what they should look like. But I digress). Providers will be eligible for shared savings based on their ability to hold down overall costs and meet quality goals which will lead to better outcomes.  The best outcomes will be achieved by managing each patient as part of a cohesive team that shares data and information and works together to achieve the best outcome.

If ACOs take hold, it would stand to reason that an ACO provider’s best chance at achieving the most favorable reimbursement is to manage the patient within their own team of doctors at their own hospitals to assure quality and control costs. Any movement to providers outside of the “group” would mean loss of control which could negatively effect payment of the shared savings.

With the Alternative Quality Contract (AQC) from Blue Cross Blue Shield of Massachusetts (BCBSMA) a hospital or physicians group enters into a new type of contract with BCBSMA.  It is a budget-based contract whereby the provider is given a global or fixed payment per patient which is adjusted annually based on health status and inflation.

In addition to the fixed payment, the provider has the ability to gain “substantial performance incentives tied to the latest nationally accepted measures of quality, effectiveness, and patient experience of care” (quote taken from the AQC website because I couldn’t think of a better way to say it).

By design it would appear that providers operating under an AQC arrangement will be motivated to control each patient’s care with providers in their facilities/groups who are also under the AQC to achieve quality “gates” and increase reimbursement.  The more control they have, the more easily they can manage each patient to the best possible outcome.

Both ACOs and AQC provider contracts are creative ways to align quality and payment, focus on the patient, and move away from the fee-for-service arrangement.  In theory, both are steps in the right direction.

But will there be any fallout?  I’m thinking yes.

When last I checked, the AQC contract applied to doctors contracted with BCBSMA’s local HMO products – local meaning Massachusetts HMO and New England HMO.  Applying it to PPO contracts was still in the works due to the challenge that a PPO model poses (no gatekeeper, ability to see any provider makes managing any single patient tricky…and paying the providers in an AQC fashion even more tricky). But if it is rolled out to PPOs, I would guess that a lot of health plans nationally will be watching it closely. And if it works the general concept, an AQC-like contract, will be adopted.

Also, Medicare beneficiaries are only going to increase in the years to come as baby boomers hit age 65.  If ACOs take hold, there will be an influx here as well.

So now you have a large number of patients managed under an ACO or AQC arrangement. Both allow additional reward for providers who increase quality and lower costs.  Both models tie additional payment to his/her ability to achieve such goals.  And let’s not kid each other – the hospitals and physicians who enter into these types of arrangements will be looking both at the increased quality as well as the additional compensation that is being dangled.

What happens when a patient wants to see another doctor who is either not under an AQC arrangement or not part of their ACO panel?

My guess is that a provider under an AQC arrangement will not be too thrilled about referring a patient to a provider who is not under an AQC arrangement as it could adversely effect the AQC provider’s reimbursement.

Similarly, an ACO provider will not be too keen on referring a patient outside of their ACO as this could adversely effect reimbursement.

I don’t believe there is a rule about whether or not a Medicare beneficiary assigned to a particular ACO will be allowed to move outside of that ACO.  My current understanding of the ACO rules/guidelines is that a Medicare beneficiary is allowed to choose any provider they’d like.

In reality, moving outside of an assigned ACO means less control for the provider and could impact their opportunity at shared savings. I’m wondering how long it will be before ACO providers are pressuring CMS to “dissuade” Medicare beneficiaries from moving outside of their assigned ACO.  (Read: apply an additional cost to the patient to move outside their ACO).

I will also not be surprised if health plan members managed by an ACQ provider will somehow find their wallets/purses lighter if they choose to seek care outside of the AQC provider’s walls.  AQC providers will look to protect themselves and negotiate this sort of clause into the contract.

Because when you mess with physician payments, there will be repercussions.  And a likely candidate in these scenarios will be patient choice.

I recently blogged about the effect on patient choice related to Tiered Networks.    Is it possible that ACOs and AQC-like provider contracts will have the same outcome as it relates to patient choice?

Time will tell.

Now if you’ll excuse me, it’s time for me to move my physician’s cheese and see what happens.

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