Government and Health Care

Hundreds of West Michigan docs now in an ACO

The POM accountable care organization organized by U-M represents 1,800 physicians.

January 25, 2013
| By Pete Daly |
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Federal health authorities have announced a new accountable care organization approved by Medicare in January that represents 1,800 doctors across Michigan’s Lower Peninsula — including perhaps a thousand or more working in or near Grand Rapids, Muskegon and surrounding counties.

The new Physician Organization of Michigan ACO includes:

  • Advantage Health/Saint Mary’s Care Network in Grand Rapids
  • Physicians’ Organization of Western Michigan, headquartered in Grand Rapids
  • Lakeshore Health Network (Hackley and Mercy hospital physicians in Muskegon)
  • Crawford Mercy Physician Hospital Organization
  • Oakland Southfield Physicians
  • Olympia Medical Services
  • United Physicians
  • U-M Faculty Group Practice
  • Wexford Physician Hospital Organization

The action by Medicare in early January is part of a massive national increase in ACOs — 106 new ones — to cover as many as 4 million Medicare patients nationwide. According to healthcare.gov, the Affordable Care Act includes a number of policies to help physicians, hospitals and other caregivers improve the safety and quality of patient care and make health care more affordable. Among those are accountable care organizations, organized groups of health care providers who provide coordinated care in chronic disease management to reduce inefficiencies like redundant diagnostics and tests while improving the quality of care. The organization’s payment is tied to achieving health care quality goals and outcomes that result in cost savings.

The POM ACO is a joint venture of the U-M Health System and physician groups around the state, with the aim of improving care for 81,000 Michiganders enrolled in traditional Medicare and slowing the growth of health care costs, according to the announcement by the U-M Health System.

The new POM ACO is led by Dr. David Spahlinger, a U-M physician. It was launched on U-M Health System’s experience as a pioneer in the ACO movement. From 2005 to 2010, the U-M Health System saved the Medicare system more than $22 million and improved care for thousands of U-M Medicare patients through a prototype ACO. Last year, it formed an ACO for its own physicians and those of IHA, a group of Ann Arbor-area specialists.

An announcement from the federal Centers for Medicare and Medicaid Services said that since passage of the Affordable Care Act, more than 250 ACOs have been established. Medicare beneficiaries using ACOs always have the freedom to choose doctors inside or outside of the ACO. ACOs share with Medicare any savings generated from lowering the growth in health care costs while meeting standards for quality of care.

Roberta Jelinek, vice president of physician integration for Saint Mary’s Health Care, said about 305 doctors are in the Advantage Health/Saint Mary's Care Network in Grand Rapids and another 300 in the Lakeshore Health Network in Muskegon.

She said there is an attempt in the health care industry to shift payment away from fees for service to a system that incentivizes practices that improve the quality of health care while holding down the costs.

In regard to the ACO, she said, “For a lot of our physicians, some of this is what they’ve already been doing,” noting that “Michigan is ahead of the curve in the way our payers have already started to incent some quality initiatives.”

Blue Cross Blue Shield of Michigan, for example, has its Physician Group Incentive Program, and Priority Health has a Physician Incentive Program.

Keith Deans is director of clinical operations and programs for the Physicians’ Organization of Western Michigan, based in Grand Rapids. It is an organization of 640 physicians, “the vast majority of which are independent” doctors in private practice, he said, and they work throughout seven counties. POWM was formed in 1986 to represent physicians whose work was involved in managed care contracts, as those were becoming larger.

Deans said the POM ACO filed an application with Medicare about 10 months ago, indicating its intent to form an ACO. He said Medicare studies the costs of care for all Medicare patients in a given region over three years, and establishes per-patient cost benchmarks that are unique for each ACO. If an ACO subsequently is able to reduce cost by 2 percent or more below the benchmark, the cost savings are shared equally by the ACO and Medicare.

“Of course, we want to do more than 2 percent savings,” said Deans.

ACOs can be of two types: “physician centric,” which is managed by the physicians themselves, or “hospital centric,” where hospitals are the managers.

On a historical note, he mentioned that the HITECH Act of 2009, which was designed to increase the use of cost- and error-saving electronic health records by doctors and hospitals, set up the concept of an ACO, but the model had actually begun with the Clinton administration and went through pilot project phases under the Bush administration.

Along with much more coordination among physicians and health systems to reduce wasteful redundancies, “transition of care” is also a major issue now in health care, according to Deans. That means the ACO must track the patient, all the way through discharge and then back to the patient’s primary care physician, to ensure the patient’s recovery at home continues.

“The last thing you want is a re-admission because somebody failed to work with the patient” after discharge, said Deans.

“Our big job right now is working with these physicians (in the ACO) to get them to communicate with one another and coordinate care. The first step is done; now the real hard work begins,” said Deans.

He predicted more ACOs are on the horizon and said that “probably in the next year or so we will see commercial ACOs involving large employers or (health care) systems.”

“This has been a long time coming, and we believe health care in the U.S. is going to be wedded to ACOs for a number of years to come, so we have to make this work.”

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