Pharma needs to understand the who, what and how of Accountable Care Organizations (ACOs) in order to develop effective marketing strategies.

Several major misconceptions currently exist that cloud discussions regarding ACOs, starting with the term “ACO.” By definition, an ACO is a Medicare provider. An ACO must care for at least 5,000 Medicare recipients for at least three years and must meet certain quality standards and cost targets. Although ACOs have a very specific definition, many health systems and physician groups use the term ACO to describe their models—even though those models are technically clinically integrated organizations (CIOs). The upshot is that when you hear the term “ACO,” the entity being referred to is more likely than not a CIO.

ACOs: Accountable for…

ACOs have items for which they are accountable, but pharmaceuticals covered under Medicare Part D are not one of these responsibilities. An ACO participant’s Part D drug costs are not part of the “shared savings” calculations. Many believe that this may be problematic for certain conditions or procedures, such as cancer care or cardiac ablation for atrial fibrillation. These are areas in which ACOs would have an incentive to switch patients to Part D therapies and away from appropriate treatments or procedures that are reimbursed through Medicare Parts A or B—for which they are responsible. The Centers for Medicare & Medicaid Services (CMS) acknowledges that these are important concerns, but the program’s quality-measurement and monitoring activities are meant to keep ACOs focused on doing the “right” thing.

CMS estimates ACO savings at $940 million over four years, if 270 organizations participate. These savings are achieved through changes in payment and care delivery. In the area of payment, ACOs are focused on aligning financial incentives for hospitals and physicians, employment of physicians, bundling payments to providers, and providing shared savings through pay-for-performance. With regard to care delivery, ACOs look to coordinate care, manage chronic care, use non-physician providers, form patient-centered medical homes, and increase the use of information technology. These new approaches are only possible through unified governance, a high level of integration, and changes in physician culture.

The Difference Between ACOs and MCOs

Although there are a great number of similarities between ACOs and managed care organizations (MCOs), there are also a few key differences. The most significant: the ACO’s inability to be an explicit gatekeeper. In fact, ACOs cannot directly control patients’ choice of physician or healthcare use. Instead, ACOs must rely on persuading patients to avoid self-referrals to specialists. It remains unclear how successful ACOs will be with these vast restraints on patient controls.

In the end, pharmaceutical companies will be successful in their dealings with ACOs if they understand the who, what, and how of these organizations. Specifically: Who are the leaders of these organizations making decisions regarding treatments? What are these organizations—are we really talking about an ACO or is the organization actually a CIO? What are ACOs responsible for—keeping in mind that some may not be responsible directly for the cost of Medicare Part D pharmaceuticals? And finally, how are these organizations going to direct patients’ clinical courses to get the results for which they are being held accountable? Only by knowing the answers to these questions in the context of specific medications can a brand manager develop and deploy effective marketing strategies.


  • Dr. Richard Stefanacci

    Richard G. Stefanacci, DO, MGH, MBA, AGSF, CMD is Chief Medical Officer at The Access Group. Dr. Stefanacci is a recognized thought-leader in healthcare reform. In addition, he leads the Government Policy Systems team, which ensures pharmaceutical products and diagnostic devices gain appropriate access and utilization.


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