David Burda: Hello, everyone. This is Dave Burda, editor of Modern Healthcare. Hospitals and physicians across the country are scrambling to put together new models of patient-care delivery. They’re doing so to cope with the healthcare system of the future being forged by the Patient Protection and Affordable Care Act. Physician Jay Crosson is the co-author of a new book called Partners in Health: How Physicians and Hospitals Can Be Accountable Together. The book offers some options for hospitals and physicians to consider. Crosson is the senior adviser for health policy for the Permanente Medical Group and former vice chairman of the Medicare Payment Advisory Commission. I recently spoke to Crosson about the essential components of an accountable care organization.
David Burda: Jay, for our readers, can you define what an accountable care organization is?
Jay Crosson: Well Dave, opinions differ on that a bit. But for me it’s very clear. Accountable care organization, to be successful, needs to include both physicians—and by that I mean primary-care physicians as well as specialists—and a hospital in some sort of organization where they work cooperatively with each other, coordinate care and can be held accountable for both the cost and quality of care over time.
David Burda: Now some people think an ACO doesn’t need to include a hospital. What’s your view on that?
Jay Crosson: I think that’s wrong. I think in the end if you have a system where the physicians are working separately with one set of incentives and the hospitals are working separately with another set of incentives, they don’t work together, they don’t talk to each other, they don’t have the same goals. It may work for a short period of time, but ultimately I think the more robust model is for having the two working in some sort of arrangement. There are different kinds of arrangements. They don’t need to all be exactly like Kaiser Permanente, where I’ve spent the last 30 years. Nevertheless, I do think that they need to work together.
David Burda: You think an ACO needs a financing component like an HMO?
Jay Crosson: That’s a good question. And I think the answer is less sure there. As I said, I come from an organization that has all three components and has for many decades. And I know it works very well. But I’ve seen other models, for example the delegated model in Southern California, where the plans are separate from the delivery system. I’ve seen organizations that I respect like the Geisinger Clinic in Pennsylvania, the Oschner Clinic in New Orleans, Henry Ford system in Detroit where the insurer is separate, for the most part. And they seem to work also. In terms of the key element, which is the care-coordination piece. So, I think in the end, I think it works a bit better if you have the insurer as part of the arrangement, but I think for an accountable care organization, per se, which is kind of a delivery system definition. In the end, I don’t think it’s going to mandatory. Better—not mandatory.
David Burda: What sort of payment system or new-fangled payment system are ACOs most compatible with?
Jay Crosson: I think in the end the most successful ACOs are those who are going to be able to move as far away from fee-for-service as is feasible for that organization. And, so, I think rather than fee-for-service with a bonus, I think the idea of partial capitation, partial prepayment if you will, and, ultimately, population-based payment or full global payment, you know, different terms for the same thing, those are going to be the most successful. They’re the ones that commit the organizations to a long-term relationship and create the most—the soundest—set of incentives for managing both the cost and quality of care.
David Burda: What do you think it will take to get ACOs operational?
Jay Crosson: Well, as I said earlier, the payer relationship has an influence, and I think you can form an ACO with doctors and hospitals, but if the payers don’t join the party, then the payment system doesn’t change and the incentives aren’t created. So we do need to have, I think, two things happen: We need to have physicians come together with physicians and form some sort of multispeciality organization. Those organizations come together with hospitals and create this integrated delivery system or accountable care organization, and then create with insurers—and I would include both public insurers and private insurers in this—long-term financing arrangements, which begin to create the right incentives. And so all parties have to play their role for this to work.
David Burda: Is there something in the marketplace right now that most closely resembles an operational ACO?
Jay Crosson: Well, obviously the one I’m most familiar with is Kaiser Permanente, where again we have all three elements: the insurer, the hospital and the physicians. I think if you look at some organizations that I mentioned like Geisinger in Pennsylvania, the Oschner Clinic in Louisiana, Henry Ford system in Detroit and around Michigan, those are systems that I think most everyone would say are already ACOs. Their payment system may not be organized yet in the ideal way. Some have partial capitation, some don’t. So there’s room, I think, for those organizations, and they would probably say they would agree there’s room for them to have payment arrangements which then make them all that more effective.
David Burda: What part of the healthcare reform law affects payments for ACOs, and what is that going to affect?
Jay Crosson: With respect to the healthcare reform law, I think the drafters understood this. And at least for the Medicare program, potentially Medicaid, but primarily Medicare program, put two sections in the law, sections, as I remember, 3021 and 3022, that speak to the responsibility of the Centers for Medicaid and Medicare Services, CMS, to use the Medicare program particularly to try to help create accountable care organizations in one of these pieces, and in the other piece, give authority to the secretary and to the CMS administrator to experiment with different payment models and creating incentives for the development of new delivery models. So, those two pieces of the law I think will be at least where the Medicare program will lead.
David Burda: Now, Jay, if you were starting all over again as a new physician, would you want to be in an ACO?
Jay Crosson: I absolutely would. I wish I could tell you honestly that 33 years ago, when I joined Kaiser Permanente, I could foresee this day. I didn’t. I went there because I was a young physician and I needed a job. My wife was also—we both needed jobs. I came to learn over time the value of what it was that I had fallen into, and the fact that by having the physicians work together, having the physicians and the hospitals work together, and have the relationship with the insurer be a supportive one over time, we could create the best environment. And had I to do it over again, I would do it exactly the same.
David Burda: Good to know. Jay, thanks for visiting with us today.
Jay Crosson: You’re welcome, very welcome. Thanks, Dave.
David Burda: This is Dave Burda for Modern Healthcare
