Accountable care organizations (ACOs)—the coalitions of physicians and hospitals being touted as models for coordinated care—should be physician led, ensure voluntary physician and patient participation, and enable independent physicians to participate.

That's what delegates to the AMA House of Delegates asserted last month during the AMA's Interim Meeting in San Diego. Delegates approved 13 principles for ACOs (see Principles for Accountable Care Organizations) addressing governance, voluntary participation of patients and doctors, use of revenues and savings, flexibility in patient referral and antitrust laws, costs associated with starting physician-led ACOs including geographic and patient selection differences, quality reporting, and use of electronic records.

ACOs have become a potential model for coordinated delivery of medical care within a reformed health care system and were designated in the Patient Protection and Affordable Care Act (the health care reform law approved by Congress earlier this year) for a demonstration project within the Medicare program. Generally, ACOs refer to coalitions of physicians and hospitals responsible for coordinating medical care for populations of patients across the continuum of care, yet questions remain about what kind of entities will qualify as ACOs and how they will be structured and operate.

(An October 2009 report by the Urban Institute titled "Can Accountable Care Organizations Improve the Value of Health Care by Solving the Cost and Quality Quandaries?" outlines the potential of ACOs for more efficient, cost-effective quality care, as well as the problems still to be resolved. That report cited three essential characteristics of an ACO: the ability to provide and manage the continuum of care across different institutional settings, including ambulatory, inpatient and postacute care; the capacity to plan budgets and resource needs prospectively; and sufficient size to support comprehensive, valid, and reliable performance measurement. According to the Urban Institute report, payers would contract directly with ACOs, and physician payment might be configured in a variety of ways with two being prominently discussed: capitation, in which the ACO would be paid a lump sum for care of a population of patients, or a "shared savings program." Under the latter, physicians would continue to be paid on a fee-for-service basis but the payer would establish expected total expenditures, and if the ACO provides the care its patients need for less than expected and quality standards are met, the ACO is rewarded with a portion of the savings as a bonus.)

Debate about ACOs and the role of physicians took center stage at the AMA meeting that occurred in the immediate aftermath of the November 2 elections in which Republicans took control of the U.S. House of Representatives.

Several other reports and resolutions related to public health and advocacy were approved with the support or active involvement of members of the Section Council on Psychiatry (see AMA Recommends Strategies to Reduce Violence in ED). But the political uncertainty created by the mid-term elections overshadowed debate about other high-profile topics such as support of civil marriage for same-sex couples and repeal of AMA support for an individual insurance mandate as part of health care reform, causing both of those items to be referred to the AMA Board of Trustees (see AMA Holds Firm on Support of Health Insurance Mandate).

John McIntyre, M.D., APA senior delegate to the Section Council on Psychiatry and a member of the AMA's Council on Medical Services, said that ACOs are a promising model for expanding access and containing cost within a coordinated system of care, but that many issues remain to be resolved regarding how they would be structured, financed, and operated.

One especially prominent issue for physicians is that under existing laws governing the referral of patients to hospitals or other entities in which a physician has a financial interest, doctors cannot legally form an ACO.

"We need to have some form of antitrust relief," he told Psychiatric News. "Otherwise, physicians who try to bond together to form an ACO or clinical integration system will run afoul of existing laws. The Affordable Care Act addresses this subject in terms of so-called ‘safe harbors’ to protect physicians, and the principles approved by the house express the AMA's support for that kind of protection."

The AMA principles state that "federal and state anti-kickback and self-referral laws and the federal Civil Monetary Penalties (CMP) statute (which prohibits payments by hospitals to physicians to reduce or limit care) should be sufficiently flexible to allow physicians to collaborate with hospitals in forming ACOs without being employed by the hospitals or ACOs. This is particularly important for physicians in small- and medium-sized practices who may want to remain independent but otherwise integrate and collaborate with other physicians ... for purposes of participating in the ACO."

A second crucial issue, McIntyre said, is how to level the playing field so that physicians in small-group practices can compete with hospitals and other large systems of care in the formation of ACOs.

"Hospital systems and large group practices are going to be able to grab market share as ACOs, and smaller physician-led groups are liable to be squeezed out," McIntyre said. "So the question is how ACOs can be developed in such a way that physicians have a central role and small-group practices can be included."

According to the latest AMA Physician Practice survey, 78 percent of office-based physicians in the United States work in practices with nine or fewer physicians. A majority of those are in either solo practices or practices of two to four physicians.

McIntyre said the Council on Medical Services will examine issues surrounding ACOs at its meeting in January and bring a report back to the House of Delegates next June.

At the meeting in San Diego, delegates also called on the AMA to develop a tool-kit that provides physicians with best practices for starting and operating an ACO, including governance structures, organizational relationships, and quality reporting and payment distribution mechanisms. The toolkit should include legal governance models and financial business models to assist physicians in making decisions about potential physician-hospital alignment strategies.

"The take-away message is that if physician-led ACOs are going to be financially viable, there need to be significant changes in federal laws and regulations concerning how physicians work together as part of a collaborative organization," McIntyre said.