Northern Nevada will have access to another key component of the Affordable Care Act following the federal government’s approval of Renown Health’s plans to launch a new coordinated care system.
Renown’s “R-Total Health” was selected as one of 123 new Accountable Care Organizations or ACOs for Medicare in 2014 — the first in Northern Nevada.
Accountable Care Organizations represent a new direction in delivering healthcare in the United States. Unlike the the current healthcare delivery system, which is based on volume, ACOs are considered a “value-based” system that emphasize quality outcomes instead of numbers for reimbursement.
The approach is considered the final component in the Affordable Care Act’s three-legged stool, along with state health insurance exchanges and the insurance coverage mandate. In addition to expanding access to health care among the uninsured, lowering costs and improving outcomes are key goals for the health insurance law also known as “Obamacare.”
“The U.S. health care system, in general, spends more money that any health care system in the world but we don’t have the types of outcomes to support that level of expenditure,” said Kirk Gillis, vice president of R-Total Health. “(Forming this ACO) is a tremendous opportunity for us not only to reconcile how much we’re spending on health care … but to do it in a way that’s more coordinated and produces better outcomes.”
To produce the desired results, R-Total Health will need to meet quality standards set by the Centers for Medicare and Medicaid Services for such measures as experience of care, coordination, prevention, at-risk care management and patient safety.
The federal government is also enticing new programs such as R-Total Health by allowing them to share in the cost savings generated through the ACOs without sharing their losses for the first three years. For R-Total Health, that grace period runs from 2014 to 2016. Should Renown decide to continue R-Total Health after that, they will need to start sharing in the losses as well if the program does not achieve the quality and cost improvements set by the federal government.
Still, the first three years represent a chance to learn about setting up and running an ACO without worrying about the financial risks.
“This is a great opportunity for us to realign our resources and move from providing inpatient-based care to a more outpatient clinic-based care for patients,” Gillis said. “I think (the federal government) has really thought this through. If you try to achieve these changes overnight, you could cause irreparable financial harm to the industry.”
Learning how to realign those resources is important because of the scope and influence that the ACO style of care will have moving forward. Although R-Total Health is currently limited to Medicare Part A and B patients, its value-based approach is starting to be applied more to the general health care system as well.
Chicago-based Advocate Health Care, for example, has hundreds of thousands of members in its ACO — the largest in the country — and has been successful at keeping more patients out of the hospital by improving outcomes. Renown is already testing a pilot program for a non-Medicare ACO by moving its approximately 8,000 employees and their family members to a similar model. It hopes to have a similar service for businesses and employers by next year.
“This is the future and we’re just getting started here in Northern Nevada,” Gillis said.
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