As the delivery system is either reformed or blown up to ferret out waste, improve quality, reduce the cost curve, become more patient-centric, promote team practice and just generally be everything that we did not learn in medical school and training, a new concept has been born. To some, it will likely be deemed "Rosemary’s Baby," but the panache and excitement around the accountable care organization (ACO) notion is palpable. The three or four varieties of what an ACO might look like are emanating from Brookings Institution, Dartmouth, the Commonwealth Fund and some of the large independent practice associations and integrated networks in California and elsewhere. We need to be involved in this evolution, because there are numerous devils in the details.

In some versions, the organization almost resembles a physician hospital organization (PHO) with a risk of a power imbalance; in others it represents an integrated system like Kaiser Permanente, Partners, Geisinger, etc--which is a positive notion, but would exclude most others from participating in payment upsides of the model if adopted. In all of its incarnations, the idea is that physicians, hospitals (some see the hospital as an optional partner), payers (like Medicare) and patients would all be invested together with some accountabilities and incentives to improve quality and also keep costs down. So, is this idea more about quality than cost? (Answer: does a chicken have lips?).

To some extent, ACOs bear a resemblance to the PROMETHEUS ideas espoused by health attorney Alice Gosfield and Bridges to Excellence CEO François de Brantes. In all the models, there is somewhat a fixed budget in health care so that the ACO provides what people feel is a better approach to what capitation was intended to produce in terms of comprehensive, coordinated, efficient, high-quality care. Interestingly, the use of registries throughout ACOs has not been deemed immediately feasible. It needs to be.

The ACC’s concern (as stated in previous blogs) is that 85 percent of Americans’ health care delivery system is not organized in an ACO-friendly circumstance. As I’ve stated previously, if the ACO idea flies with inherent bonuses and payment incentives, the integrated systems will rightfully take off with these new advantages, but others will be left in the dust. That’s why the ACC has developed a third path to becoming an ACO over time (impossible for most), rather than just sticking with the fee-for-service (FFS) status quo.

Our approach is to create a virtual group practice model around a registry-based voluntary group of primary and specialty physicians with new Medicare incentives for increased reimbursement if they produce higher quality and value through such activities as reducing re-admissions, improving appropriateness of imaging, reducing variation and/or other quality-related activities. Our proposal is now in a three-page version, given legitimate criticism that the previous one was too long for anyone to actually read and understand. If you want to take a look and offer some feedback, you can do so here. Note that our proposal does accept accountability to keep Medicare from rising, even though there could be a very large upside for physicians, nurses and others.

We envision three kinds of incentives as being necessary in this pilot: one for patients, perhaps lower co-pays for participating; one for hospitals, perhaps higher DRGs for working with doctors to ensure the transition from inpatient to outpatient care goes smoothly and safely; and one for the physician and care team participants in the Quality Network forum. If this kind of pilot project were to be tested, we think it could forge a glide-path from uncoordinated small and solo practice toward accountable care organizations comprised of virtual groups working with patients and hospitals to improve care.