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News Center > Pulse > 2012 > What is an Accountable Care Organization?
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What is an Accountable Care Organization?

what is an affordable care organizationAs the affordable Care Act slowly comes into effect, new Accountable Care Organizations (ACO) are being formed for Medicare patients who have traditional Medicare coverage. Torrance Memorial Medical Center launched its ACO on April 1, 2012, one of the first in the country to set up such a program. John McNamara, MD, chief medical officer and executive director of Torrance Memorial Integrated Physicians, provides details about ACOs.

Please explain what Accountable Care Organizations do?

JM: First off, ACOs are formed to better coordinate patient care for those enrolled in the traditional Medicare program. By this I mean, ACOs are directed to enrollees who have Medicare Part A and B, and are not members of a Medicare Advantage HMO plan. While there are advantages and disadvantages to enrollment in HMO plans, one advantage is that providers (doctors and hospitals) have formed organizations to actively coordinate patient care and communication between patients, families and providers. Under the Affordable Care Act, the law allows providers to establish ACOs, which can offer the same care coordination models and options available to HMO plans. One difference remains however. Medicare enrollees in traditional Medicare still have complete freedom of selection of their physician and hospital. The ACO is just an added program.

How do I know if I’m part of an ACO?

JM: Medicare beneficiaries are assigned to ACOs based on whether the physician they have most commonly seen is a member of an ACO. You will be getting a letter from your physician’s ACO if you have been assigned. In that letter, the program will be further described along with your options for sharing your medical data with other providers.

So ACOs are the middle ground between HMOs and original Medicare?

JM: With an HMO, you are limited in the physicians you might be able to see. With fee-for-services, you are able to go anywhere you want to get things done. If the hospital or physician is in the insurance company’s provider network, you might pay 20% out of pocket, up to a certain amount, and then you didn’t pay any more. If you went to someone who was not in the provider network, say someone who seems the best in the country, you might pay 50% out of pocket. The ACO is in between the two, with the idea of a narrow network that manages the people like they’re in managed care but does it so well, they don’t want to go elsewhere—even though they have that choice.

Please talk about coordinating care.

JM: We’ve always had problems with doctors communi­cating with one another. A specialist might write up a medi­cation for a patient, and that might not ever get back to the primary care doctor. Or people come to the hospital to be treated for something, but the primary care physicians may not even realize the patient has been in the hospital. All of that leads to poor coordination in that all of the physicians may not be following a unified plan. ACOs promote better communication.

Are ACOs limited to Medicare patients?

JM: Medicare was the first to test the ACO structure, but there will gradually be more. We now have a contract to partner with Blue Cross and we are going to offer an ACO to Torrance Memorial Medical Center employees and other Blue Cross members starting in January.

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