AM: Value-based Health Care (VHBC) is progressively disrupting health markets by creating space for improving quality, reduce costs and paying for performance and outcomes. How are ACOs contributing to this new view of the health market place?

ML: VBHC has stimulated quality in the US in terms of finding ways to incentivize and promote quality, and it has implicitly linked this agenda to a reform of the payment system to incentivize desired outcomes. VBHC is part of a larger movement sparked by the National Institute of Medicine reports: “To Err is Human” and “Crossing the Quality Chasm”. The Accountable Care Organizations (ACOs) are building on those objectives and offer a path to improved integrated and coordinated care that allow paying for value.

 ACOs create a partnership between payers and providers, making them accountable to each other within the organization. The structure of the ACO and the embedded incentives that lead to cost containment and higher quality of care include easily accessible primary care services for the defined patient population, prioritization of prevention, and chronic disease management that emphasizes integrated and coordinated care. Together, these initiatives reduce reliance on hospitalizations and emergency care that both improve quality of care for patients and control costs for providers. I have just completed a paper on the subject that provides some insights into ACOs.

AM: What are the basic features of the ACO model and how is this different from traditional secondary-level institutions?

ML: The integration of care delivery, financing, information systems, management and marketing set ACOs apart, and so do the incentives of their payment arrangements. Their integration allows joint decision making on how to structure and operate the organization, and it is built on data, efficiency and quality. Importantly, data are used to track clinical care, costs, productivity, patient satisfaction and other indicators of performance. Information technology and data availability at all levels of the ACO are key, as neither quality nor efficiency can be measured without adequate and appropriate data. Data at the point of care is particularly important to support physicians in their disease management and coordination of care functions.

AM: You mentioned that ACOs in US emerged from various angles, such as hospitals expanding outpatient services or health insurance engaging with providers. Could this process be replicated in developing countries such as Brazil? What are the preconditions to do this in Brazil’s SUS or in the health insurance market?

ML: ACOs offer an excellent alternative for fee-for-service dependent systems, but two elements are critical for an ACO: (1) information systems that produce relevant and regular data for monitoring at all levels of the organization, from nurses to physicians to hospital managers to diagnostic providers to clinical managers; and (2) incentives for performance, meaning the providers and managers are accountable for their activities, and receive rewards and/or penalties for meeting or not meeting, respectively, predetermined goals. Without data management, goals and accountabilities are not possible; and, without incentives, change is difficult if not impossible.

Brazil could easily adopt ACOs through various arrangements, for example: as part of a major hospital network; as a new service program built around physician practices; as a major laboratory service company joining with physician practices. Partnerships of players integral to delivering quality care are at the heart of ACOs and can be adapted to the interests of different kinds of investors and actors. Given the strong insurance market in Brazil, partnerships between payers and the above delivery groups could move the cost containment and quality agendas forward. But it implies new ways of doing business.

ACOs are ideal for public-private partnerships (PPPs), adapting the OSS model in São Paulo, for example, where non-profits have full responsibility for service delivery and management. These arrangements are used extensively in the US by Medicaid, the public insurer for the poor that contracts with private companies and non-profits to set up ACOs that serve that population segment. Data and incentives allow government to accompany and oversee progress. Cambridge Health Alliance, an ACO in Boston, is an example where the city has contracted with an ACO to deliver care to a defined population, and they have supported the development of IT, managers and indicators. It entails good management on the part of government, but it helps to shift provision to integrated care providers who have the tools and flexibility to be efficient and raise quality.

AM: In Brazil, the SUS created institutions such as the UPAS, with the objective to increase effectiveness of the health delivery by reducing unnecessary hospitalizations. Do you think that UPAS could be operated similarly to the ACOs in order to improve integrated care in the SUS?

ML: UPAS are a good idea, but they lack the incentives, flexibility, data and accountability that allow ACOs to function effectively. First, the simple lack of electronic health records (EHRs) that allow clinicians to serve patients across time and levels of care undermines the ability to provide integrated care. UPAS physicians and nurses lack the needed data about patients at the point of care. Second, UPAS do not face incentives to avoid the use of higher level care, and are not rewarded for keeping patients healthy and away from unneeded higher levels of care. Third, in places where patients can self-refer to hospitals – as is the case in much of Brazil – providers must make it easy for patients to access primary care. Our work in São Paulo with Consocial suggests that accessing UPAS is time consuming and protracted, leading frustrated patients to public hospitals or the private sector.

AM: Could ACOs work as standalone institutions or do they need to be integrated into health networks to operate efficiently?

ML: ACOs either have an integrated network or access other providers on a contract basis to provide easy access for their patients. For example, an integrated care provider can contract with diagnostic centers, laboratories and hospitals for referral services for their patient population. The primary care providers coordinate care for their patients at all levels, so effectively the primary care providers integrate the services each individual patient needs.

AM: Given that the main incentive to create ACOs lies in changing the payment system, which new healthcare payment systems need to be implemented in Brazil, and what are the challenges and preconditions to implement them?

ML: Payment arrangements within ACOs can take virtually any form and ACOs lend themselves to a combination of payment arrangements. For example, fee-for-service can co-exist with capitation and bundled payments depending on the range of services being offered; alternatively, and most commonly, ACOs simply rely on capitation, but with payment tied to performance, namely cost containment and quality outcomes. Here again, the information system is key to provide data on key indicators. However, the significant payment innovation in ACOs are “shared savings”, where payers, managers and providers share in savings from the lower costs and enhanced quality of care that comes from focusing on primary care and reducing (over) use of hospital and emergency room services. This is a unique payment arrangement that underpins ACO incentives. These are easily adapted in Brazil – the challenge is the partnership that makes it happen and helping providers adapt to change, but these are challenges in the US as well.

AM: Brazil has seen lots of progress in both the SUS and ANS information systems. Are the current systems in Brazil enough to implement a VBHC culture in the Brazilian health systems (SUS and saúde suplementar)? 

ML: The situation is mixed. UNIMED BH has such information, as do some of the closed operadores in other major cities in saúde suplementar, but most do not. Those that do can build on that capacity, making the shift to the ACO model less onerous. SUS information systems are lagging behind. It requires investments but more importantly a platform that allows development of EHRs as well as information about the performance of providers and outcomes of care. SUS has neither, and many operadores lack them as well.