Health Care Reform: An ACO/PCMH Primer for Psychologists

By Rick McGraw, Ph.D.
July 24, 2013

Psychologists can share in the enormous opportunity health care reform offers many institutional providers that have invested millions of dollars in becoming, incentivizing, supporting and transforming Accountable Care Organizations (ACOs).

The ACO movement has the confidence of sophisticated players across the system. They understand that value-based quality care is the standard of the future. Psychologists cannot afford any degree of exclusion from this process.

What is an ACO?

An ACO is a legal entity comprised of groups of providers willing to become accountable for quality, cost and overall care for designated populations. The minimum number of patients for a health care organization to qualify is 5,000. Hospitals and other organizations are buying physician practices and other health care units to accumulate the patient bases to form ACOs.

An ACO unites normally unrelated health care entities, e.g., hospitals, primary care practices, specialty practices, outpatient surgical units, home health care groups, urgent care clinics, psychiatric facilities, skilled nursing facilities, outpatient specialty units, diagnostic facilities and pharmacies. Care is then coordinated across multiple specialties and care settings, both inpatient and outpatient.

Quality and efficacy are pursued through evidenced-based practices using disease management protocols and clinical decision support to guide collaborative shared decision-making. Program evaluation and outcome measures assess ongoing intervention, safety issues, patient satisfaction, prevention, disease identification and total cost of care.

Health information technology will be a key component of ACO functioning.

One model of reimbursement from payers may utilize a still evolving shared services approach that it is hoped will motivate ACO participants to coordinate care and lower costs in order to maximize profits. Some of the savings would then be shared among the participants as incentives. Some physicians and others have expressed apprehension that private payers will attempt to retain an inordinate share of cost savings in this process unless agreements are carefully constructed.

According to the American Hospital Association, there are 428 ACOs in the nation as of Jan. 10. Every state has at least one and at least two have more than 10. Among current ACOs, there are more private ACOs than Medicare ACOs. The primary difference between private and Medicare ACOs is payment models.

Private ACOs have a wider range of payment structures, e.g., full or partial capitation, bundled payments, retainer agreements, subsidies and the aforementioned pay-for-performance incentives. Medicare has its own performance and quality incentive system. It is anticipated that those ACOs that are hybrids, with both private and Medicare components, will gradually shift to the Medicare payment structure to increase efficiency and cost savings.

What is a PCMH?

Unlike the last generation of managed care, the Patient-Centered Medical Home (PCMH) is the core of an ACO. A PCMH is an individualized primary care model with integrated specialists (including behavioral health) that are supported by hospitals and other parts of the delivery system. Many consider ACOs a viable vehicle for changing incentives so that we move from a sick care system where money primarily flows after an individual gets sick to a true health care system that focuses on primary prevention. The potential for savings and optimal utilization of limited health care resources is enormous.

Critical in the PCMH or “medical neighborhood” component is care coordination. Communication must be assured through incentives that ensure transitions and resource alignment to meet population needs. This is even more important for effective management of chronic conditions, including behavioral health.

A significant opportunity for psychologists is in PCMH primary care settings where mental health problems are common but often unrecognized, resulting in excess health care costs. Some psychologists express a reluctance to engage in “health” or “medical” psychology.

However, many of the patients seen in primary care settings primarily need treatment for anxiety or depression and there is need for both traditional, albeit brief and focused, intervention as well as for specialists in health behavior change, unexplained somatic symptoms and behavioral and emotional contributions to chronic medical conditions.

A psychologist is the best candidate for participation as the behavioral health consultant on the health team coordinating individualized community-wide treatment plans.

What’s a psychologist to do? If you are nearing retirement, perhaps nothing. The current fee-for-service system, even within Medicare, will continue to co-exist for at least some time. But if you are mid- or early career, you can anticipate competition from the cost and quality focused (with data to support) ACOs that will be increasingly attractive to health care consumers, both individual and organizational.

Most rural providers and those with highly specialized practices will enjoy some isolation, at least initially, from these dynamics as will those whose practices are primarily or entirely private pay. But if psychology is to continue to serve the majority of the general population, we will likely find that the health care of a great many of those individuals who will benefit from increased access will be coordinated by ACOs.

The good news is that there will likely be a number of ways to participate in this evolving system in terms of structure and degree.

Rick McGraw, Ph.D., is a clinical psychologist practicing in San Angelo, Texas, and represents the Texas Psychological Association on the APA Council of Representatives. His email is:
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