Accountable care organizations (ACOs) are groups of doctors, hospitals, and other healthcare providers, who come together voluntarily to give coordinated high quality care to the patients they serve. Coordinated care helps ensure that patients, especially the chronically ill, get the right care at the right time, with the goal of avoiding unnecessary duplication of services and preventing medical errors. When an ACO succeeds in both delivering high-quality care and spending healthcare dollars more wisely, it will share in the savings it achieves for the Medicare program.1 The overall goal of the ACO is to reduce costs by focusing on preventative care and disease management.
Accountable care organizations (ACOs) are groups of doctors, hospitals, and other healthcare providers, who come together voluntarily to give coordinated high-quality care to the patients they serve. Coordinated care helps ensure that patients, especially the chronically ill, get the right care at the right time, with the goal of avoiding unnecessary duplication of services and preventing medical errors. When an ACO succeeds in both delivering high-quality care and spending healthcare dollars more wisely, it will share in the savings it achieves for the Medicare program.1 The overall goal of the ACO is to reduce costs by focusing on preventive care and disease management.
From an historical perspective, ACOs like physician organizations have existed in commercial risk-based capitated models of reimbursement for many years. These groups commonly established their own pharmacy and therapeutics (P&T) committees whose mission it was to provide affiliated healthcare providers with unbiased, academically-driven drug evaluations, and a preferred drug list designed to optimize the balance between evidence-based medicine and fiscal responsibility in their managed care risk environment. Under a commercial capitated model of reimbursement, the cost of prescription drugs, net of copay, were included as part of the per-member-per-month (PMPM) global payment. Therefore the committee’s financial analysis was centered off the contractual arrangements between payer and provider, typically average wholesale price (AWP), and supported the financial interest of the commercial ACO members. In combination with a robust pharmacy-driven academic detailing program, many of these organization were successful in driving up generic utilization and reducing net medication cost in a commercial HMO patient population.
On March 23, 2010, the Patient Protection and Affordable Care Act (PPACA) was signed into law by President Obama. Included in the federal Patient Protection and Affordable Care Act is strategy for transitioning away from a fee-for-service payment to a global payment model of physician reimbursement. The goal was to establish a ppopulation based per-beneficiary-per-month form of payment. However, unlike the commercial ACO model, Part D prescription drugs are exempt from the global payment. PPACA also allows for the formation of ACOs that voluntarily meet quality thresholds to share in the cost savings they achieve for the Medicare ACO program. To address the goal of improving healthcare quality, the Centers for Medicare & Medicaid Services (CMS) will measure quality of care using nationally recognized measures in 4 key domains: patient/caregiver experience (7 measures); care coordination/patient safety (6 measures); preventive health (8 measures), at-risk population; diabetes (1 measure and 1 composite consisting of 5 measures); hypertension (1 measure); ischemic vascular disease (2 measures); heart failure (1 measure); and coronary artery disease (1 composite consisting of 2 measures).2
There are currently 33 measures within these domains and many of these quality measures have a pharmacy component as part of the metric (Table 1). In the first year of the ACO agreement, all 33 measures used for scoring purposes will be for reporting only. The pay-for-performance phase-in of measures will begin in year 2. With the adoption of the ACO model, we have begun to see a resurrection of global payment with significant emphasis on quality. Subsequently, the P&T committees associated with these organizations will need to re-modify their medication analysis to support these new contractual arrangements.
First, even with the lack of Part D medication risk by Medicare ACOs, the net cost of medications is still of fundamental importance. Patients out-of-pocket cost will affect adherence to prescribed treatments and possibly adversely affect the quality of care delivered. This is of deep concern for patients who have high-risk chronic conditions and are required to take multiple medications. According to a meta-analysis published in 2012 in the Annals of Internal Medicine, Americans are failing to comply with medication prescriptions for a variety of reasons, and it is costing healthcare anywhere from $100 billion to $289 billion a year. The study concluded that reduced out-of-pocket expenses, case management, and patient education with behavioral support all improved medication adherence for more than 1 condition.3 However, the traditional analysis of safety, efficacy and net cost must be expanded to incorporate a model of looking at medications from the perspective of value. Since most patients are with their primary care physicians for many years, the ACO formulary could theoretically be viewed as an investment. The return on the investment will be measured by improved patient outcomes and the success in meeting the ACO quality measures and performance standards of care. If a particular medication provides improved outcomes at a premium cost, will it be used? The answer is yes, provided the data supporting improved outcomes is robust and sound. So along with the real concerns of patient out-of-pocket cost affecting adherence, a balance must be obtained between both out-of-pocket cost and ACO risk from a perspective of total cost of care. No longer can the financial impact of a particular medication be strictly viewed as part of a pharmacy budget, but rather, the net effect the utilization of a specific medication will have on total medical expense.
Second, for an appropriate analysis on the value of a specific medication, formulary inclusion criteria will need to incorporate comparative effectiveness data. Unfortunately this type of data is sorely lacking. Only about half of new drugs approved in the last decade had comparative effectiveness data available at the time of their approval by FDA, and approximately two-thirds of new drugs had this information available when alternative treatment options existed, according to a study in the May 4, 2011, issue of JAMA.4 The good news is that The American Recovery and Reinvestment Act of 2009 created the Federal Coordinating Council for Comparative Effectiveness Research to coordinate comparative effectiveness research across the federal government. The Council will specifically make recommendations for the $400 million allocated to the Office of the Secretary for Effectiveness Research.5 If done right, the availability of more vigorous comparative effectiveness data will identify the latest information available on what treatments are safest and most efficacious. This will aid in the development of outcome based formularies going forward.
Finally, a periodic review of best practices guidelines for meeting the ACO nationally established quality measures will need to be conducted by ACO P&T committees. Given the significant number of measures that encompass medications, it will be important to establish guidelines to support their judicial use and to share those best practices with healthcare providers
As I look into the future, I can envision ACOs adopting a process to review medicine similar to the United Kingdom's National Institute for Health and Care Excellence (NICE). NICE is an independent organization responsible for providing national guidance to the NHS on public health, treatments, and clinical practice. Their recommendations are based on both clinical evidence and cost effectiveness which mimics a model where I believe ACO P&T committees are heading.
Mr Muise is director of pharmacy for the Mount Auburn Cambridge Independent Practice Association. He is also an assistant clinical professor for Northeastern University Bouvé College of Health Sciences School of Pharmacy, Boston.
1. Centers for Medicare & Medicaid Services. Center for Medicare & Medicaid Innovation. Accountable care organizations (ACOs): general information. Available at: http://innovation.cms.gov/initiatives/ACO. Accessed July 11, 2013
2. Centers for Medicare & Medicaid Services. Accountable care organizations 2013 program analysis: quality performance standards, narrative measure specifications (December 21, 2012). Available at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/sharedsavingsprogram/Downloads/ACO-NarrativeMeasures-Specs.pdf. Accessed July 16, 2013
3. Viswanathan M, Golin CE, Jones CD, et al. Interventions to improve adherence to self-administered medications for chronic diseases in the United States: a systematic review. Ann Intern Med. 2012;157:785–795.
4. ScienceDaily. Many new drugs did not have comparative effectiveness information available at time of FDA approval, study finds. May 4, 2011. Available at: http://www.sciencedaily.com/releases/2011/05/110503161400.htm. Accessed July 15, 2013.
5. U.S. Department of Health & Human Services. HHS.gov/Recovery. Comparative effectiveness research funding. Available at: http://www.hhs.gov/recovery/programs/cer. Accessed July 15, 2013.