Accountable Care Organizations are the building blocks of opportunity
by Alan Morris
April 10, 2012

ACO, the acronym for an Accountable Care Organization, is a buzzword these days in the health care industry. Nearly everybody has heard the term by now. Many are wondering, what does it mean to medicine, and more importantly, what does it mean to HME providers?

Here are the basics.

Medicare ACOs are a product of the Affordable Care Act, and were conceived in an attempt to find a solution meeting former CMS Administrator Don Berwick’s “Triple Aim” vision for health care reform:

  1.  Improve the experience of care.
  2. Improve the health of groups of people.
  3. Reduce the per capita costs of health care.

An ACO, in concept, is simple. A group of medical providers—including hospitals, physicians groups and suppliers—unite as a single legal entity. Its goal is to collaboratively improve care, reduce use of the Medicare system and improve outcomes.

The ACO concept has garnered widespread bi-partisan support on Capitol Hill. Perception among health care professionals, however, is mixed.

Many associations have supported the concept, with some of the nation’s largest and most popular health systems investing millions. Meanwhile, other equally popular organizations and associations have voiced reservations.

Nonetheless, CMS is moving forward, and has already identified 32 health systems as “Pioneer” accountable care organizations. More than 200 other systems have taken steps to potentially participate in the next phase of the program.

ACOs are measured on 33 core outcomes and satisfaction measures, as well as historical utilization data. If they can improve outcomes while reducing length-of-stay averages, re-hospitalization rates, redundancies in testing and improve other measures, Medicare will share the savings with the ACO.

Implementation of a program like this, however, might not be so simple, even though health care providers have been granted great flexibility to develop ACO models. They have the incredible task of developing a new infrastructure, setting egos aside and finding new ways to deliver health care.

ACOs require integrated electronic health records, collaboration among providers who have traditionally competed for the same dollars and support and buy-in from every level of the health care spectrum. It’s a tall order, but hundreds of health systems and many private insurers are seemingly prepared to try to make it work.

ACOs and HMEs

So where does the HME supplier fit into the ACO model?

The ACO final rule, published in late 2011, opened the door for participation in ACOs by all provider and supplier types, including all DMEPOS. An HME supplier may be a formal participant in the organization, meaning they will be eligible to share in the risk/reward opportunity.

The challenge is proving HME’s value. ACO administrators are not obligated to include any supplier or provider type, hospitals and primary care physicians aside. They can, but they don’t have to. So if you are an HME provider wanting a position in an ACO, you must bring real, measurable value, keeping the ACO’s 33 core measures in mind.

On the surface, an ACO is going to see one supplier as being exactly like the next, and have little motivation to include one over another. A common stance of an ACO would be: “If I can get the same return from any HME supplier in the market, why would I feel obligated to share in the revenue opportunity with one of them?”

But if an HME supplier can show it is measurably better than others, and can bring real value to the ACO by improving that ACO’s core measure scores, administrators may see the possibilities and be willing to open the door to inclusion in the risk/reward pool.

This, then, begs the question: What does it mean to be “measurably” better than another HME supplier, especially in an ACO’s eyes? At its simplest level, an ACO is focused on three aspects of care: outcomes, patient satisfaction and cost containment.

How does one HME supplier help improve outcomes more than another, or how does that same supplier assist in cost containment?  Certainly, suppliers will sell themselves on speedy delivery times, friendly and knowledgeable staff, quality equipment—all things that undoubtedly bring value in any environment. But those are not the game-changing values that an ACO is probably seeking.

ACOs want to be able to send patients home knowing they are in the hands of a supplier who can dramatically decrease the likelihood that the patient will need more expensive medical care. If those patients do need more medical care, the ACO wants to know that they will be returning to visit their physician, not the emergency room.

HME suppliers can implement programs that are strong enough to get an ACO’s attention. In fact, they must for two reasons:

First, ACOs are largely incentivized to reduce use of their systems, meaning reduced length-of-stay averages and readmission rates. If these two things occur, patients will go to the least expensive and most desirable location—home. Sure, improved processes and outcomes will contribute to reducing patient time in the hospital, but to truly contain costs, ACOs must find ways to move non-acute care to the least expensive setting.

Second, the HME industry desperately needs to find ways to gain respect from others in the health care system, Medicare and legislators. ACOs, along with other pay-for-performance programs, are the perfect opportunity to do so. We all know there is an incredible return on HME investment. We also know that a savvy HME supplier is capable of doing more than simply delivering commodity items to the home, even though that’s how the outside world perceives our industry.

Programs for Opportunities

The opportunity is quite simple: HME suppliers can partner with ACOs to better manage the transition of patients from hospital to home, as well as manage large home-based patient populations to prevent re-hospitalizations.

A successful program is likely to include health coaching, a hospital-to-home care transition protocol, disease outcomes management and an effective communication model between the HME provider and physicians.

The formula for capitalizing on the opportunity and delivering solutions to the ACO may vary, but for successful HME providers, each of the components will play a role.

The challenge for many HME suppliers will not be implementing a program. Most will see the opportunity and welcome it with open arms should it become a viable option. The difficult part will be selling the value to a health system. Certainly entities like VGM and its partner HealthCall will work with you to do so, but the HME has to create that relationship and, at the least, propose the concept.

Once you earn a seat at the table, the sales process becomes simple. Sell yourself based on the ACO’s hot-button items: They need to reduce length of stay; you will gladly work with them to get the patients home.  They need to reduce readmissions; you will gladly work with them to keep patients at home. They need to improve outcomes; you will gladly help implement disease management to improve outcomes for patients with chronic conditions. COPD, heart failure, pneumonia, AMI and diabetes are widely recognized as target areas, and will undoubtedly be a focal point for any HME provider planning to work with an ACO.

The end goal has to be recognition that the future of HME relies on a stronger business and clinical model, and being a pioneer ready to take the steps necessary to lead the way to a higher position in the health care continuum.