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Accountable Care Strategies: Lessons from the Premier Health Care Alliance's Accountable Care Collaborative

To contain spiraling health care costs, expand access to care, promote wellness, and improve outcomes, the nation’s health care providers must work together and be held accountable for their performance. U.S. health care costs have been growing at an unsustainable rate, reaching an estimated 17.3 percent of the gross domestic product in 2009, according to the Centers for Medicare and Medicaid Services (CMS). Yet even with these high costs, consumers do not get as much value for health care spending as those in other nations, as there continue to be gaps and inequities in the quality of health care delivered nationwide.

The nation’s quality and cost problems are rooted in the dominant fee-for-service payment system, which has created a health care “production” model driven by volume and based on incentives to do more, rather than to do better. At the same time, incentives reward bad outcomes, as “curing” the harm from a medical error or a preventable readmission earns additional payment. One of the most promising strategies for improvement is the creation of accountable care organizations (ACOs), in which providers take responsibility for a defined population, coordinate care across settings, and are held to benchmark levels of quality and cost. Unlike some previous delivery system reforms, ACOs seek to balance cost control with efforts to improve outcomes and enhance people’s satisfaction.

While much attention has been paid to the public policy around ACOs, there has been less focus on the health care organizations and private payers that are building, testing, and bringing to scale new models of care delivery, including ACOs. To develop an ACO model that can be replicated for both public and private payers across many hospitals, health systems, and physician practices, Premier, a national performance improvement alliance of 2,600 U.S. hospitals and 84,000 other health care sites, launched an accountable care implementation collaborative in May 2010. This report provides an overview of ACOs and strategies for their implementation based on the perspectives of hospital and health system members participating in the collaborative. Several lessons emerged from the collaborative:

  • Six core structural components are needed to implement an effective ACO, including: 1) a commitment to providing care that puts people at the center of all clinical decision-making, 2) a health home that provides primary and preventive care, 3) population health and data management capabilities, 4) a provider network that delivers top outcomes at a reduced cost, 5) an established ACO governance structure, and 6) payer partnership arrangements. These components go well beyond those detailed in the Affordable Care Act or the Medicare Shared Savings Program. In essence, the Shared Savings Program creates partnerships between a group of providers operating as an ACO and CMS—just one of the elements necessary to deliver integrated care.
  • Many different organizational models could work for ACOs. It is not necessary for a clinically integrated provider network—and, by extension, an ACO—to be a single, co-owned legal entity comprising physicians and/or hospitals, whether under the Shared Savings Program or in the private sector. Instead, accountability can be achieved through a network of coordinated relationships that fall short of corporate integration. A collaborative arrangement based on contractual relationships among the ACOs owners and provider participants is an acceptable model for an ACO.
  • People-centered care entails more than coordination; it takes into account individuals’ experiences at every point at which they interact with the ACO. ACO leaders must monitor care experiences from the individuals’ perspective and be willing to address shortcomings. ACOs must communicate effectively with people, help them manage their conditions, and empower them to use nontraditional means of accessing care, such as remote monitoring of health status, telemedicine, and online portals that include personal health records.
  • To maximize potential to control costs and improve value, it is critical for an ACO to align as much of its business as possible with value-based payments. Many organizations pursuing accountable care are already participating in alternative payment mechanisms in the private sector, albeit on a limited scale. Working under two different payment systems creates parallel business models—one based on shared savings incentives that reward value and another (the traditional fee-for-service approach) that mainly rewards volume. Aligning Medicare and private-sector payment models, to the extent possible, also will create synergies that facilitate transitions to value-based payments.
  • ACO leaders need to design incentives that encourage providers to work together to deliver effective, efficient care—avoiding unintended consequences that could lead to suboptimal outcomes. For example, many compensation systems are based on production. In an ACO, physicians will need to be rewarded for productivity, and also given incentives to deliver high-quality care based on predefined measures. Ultimately, compensation systems need to be determined based on the makeup of the physician population, the relationships that exist between providers and payers, and other local factors. Leaders should explore these issues in collaboration with the physicians who will have to work under the new payment structure, and allow them to influence the approach.
  • To ensure adequate funding, ACO planners need financial modeling capabilities to assess the economic impact associated with a system-wide transition to accountable care. Leaders must have access to resources such as operating cash flow, redistribution of existing capital investments, or external funding to effectively operate and manage the ACO. Financial modeling analyses help providers set appropriate targets for short- and long-term budgets, investments, and other financial needs as they make the transition from fee-for-service to value-based payments. Equally important, financial modeling is essential to evaluate various payment options, including the two Shared Savings Program tracks, capitated payments offered though the CMS Innovation Center, and private payer arrangements.
  • ACOs require an extensive investment in information technology to improve care coordination and prevent duplication of efforts. However, few providers have developed population health data management capabilities, or have used information technology to streamline and improve the clinical and administrative aspects of care. To succeed as ACOs, providers need seamless care coordination with sophisticated population health status measurement capabilities that will improve health status and reduce overall costs.
  • ACOs must be able to measure and assess their performance on a broad range of clinical quality, efficiency, and patient satisfaction measures. ACOs typically require de-identified and aggregated reports including data on utilization of services, patient demographics, financial performance, quality scores, and other relevant metrics at least quarterly. Moreover, individual encounter records must be linked across the continuum of service settings to conduct predictive modeling, appropriately target services, evaluate providers’ performance in meeting quality targets, and determine interventions that may be required in the near term. But such performance reports are often massive in size and scope. ACOs will need to develop reports in formats that cull through the “noise” to find the relevant information and present it in a digestible and actionable format. 

Publication Details



A. J. Forster, B. G. Childs, J. F. Damore et al., Accountable Care Strategies: Lessons from the Premier Health Care Alliance's Accountable Care Collaborative, The Commonwealth Fund, August 2012.