Path Set for ACOs in Healthcare Delivery

Even if the U.S. Supreme Court strikes down the Obama administration-backed healthcare reform legislation, accountable care organizations (ACOs) — models aimed at improving the quality of healthcare delivery while decreasing costs — are likely to survive, say a panel of experts in healthcare liability issues.

ACOs are networks of healthcare providers that band together to provide for the consistency and coordination of services for patients. Developed partly in anticipation of and in response to the Patient Protection and Affordable Care Act of 2010, ACOs are similar in some ways to health maintenance organizations (HMOs), which were developed in the 1980s and fell out of favor mainly due to restrictions in care and services available to patients.

“There are probably as many types of ACOs as there are car models on the market,” said Kristin McMahon, chief claims officer for IronHealth. However, they mostly fall into two broad categories — public and commercial. The categories are defined by who pays, whether it’s a governmental entity, such as Medicare, or a private insurance organization.

Speaking at a recent PLUS Medical Professional Liability Symposium as part of a panel on liability exposures faced by ACOs, McMahon explained that ACOs are both the result of an evolution in healthcare delivery models in reaction to HMOs and an attempt to improve the quality of healthcare while keeping costs down.

With the early HMOs, insurers would assign “a fixed monthly per patient payment to a provider and that payment was meant to cover all treatments for that patient,” McMahon said. “In addition, health insurers implemented a lot of cost containment measures,” such as gatekeeper systems, under which a patient could only see a specialist if their primary care physician provided a referral.

“There were restricted networks, there were gag orders forbidding physicians from discussing patients’ alternative, albeit more expensive health care options. … This infuriated the American public,” McMahon said.

As a result, lawsuits followed as did multi-million dollar jury awards.

ACOs, on the other hand, are patient-centric models designed to implement quality without limiting choice, she said. Common characteristics of successful ACOs include broader access to care with extended hours and weekend access, case management, management of electronic medical records, care coordinators and use of data analytic systems to track population management.

Liabilities and Exposures

While they differ in a number of ways from HMOs, ACOs may have many of the same liability issues as previous healthcare delivery models, according to Ciara Frost, a partner in the Chicago-based law firm of Kerns Frost Pearlman LLC.

Frost said there are risks that may arise out of the nature of an ACO’s structure and its partners, which include a variety of providers, vendors and other participants.

“The ACO liability exposures are similar to historical managed care organization exposures in many respects,” Frost said. However, they differ in that there is more freedom of choice for care alternatives — participants can go out of network for care if they choose — and the financial restraints on physicians often imposed by traditional HMOs are absent, so there’s a lower risk of litigation over those types of exposures.

“Nevertheless there still are financial incentives to cut costs and under-utilize, and you can be sure the plaintiffs’ bar will be very focused on those,” Frost said.

ACOs are “assuming accountability for quality of care. They also assume the duty to coordinate that care,” she said. Theoretically, the assumption of those duties should heighten ACO’s liability risk going forward.

“ACOs are the primary provider organization. No matter what they do they’re going to be [responsible] for outcomes and that may lead to negligence claims,” Frost said.

Medical treatment is one obvious exposure that is likely to give rise to claims against ACOs, she said, but there are others. “I think we’re going to see more claims on failure to coordinate care,” she said. ACOs have an obligation to coordinate care but “that’s easier said than done. … Where things fall through the cracks for various reasons the ACO may be held accountable for those lapses.”

Regardless of the liability exposures they may face, ACOs in some form are likely to remain the future of healthcare delivery, the experts say.