Will ACOs work in rural areas?

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Like most small-town hospital administrators, Dennis George has been listening to the debate over Accountable Care Organizations and how the federal government would like to use them to promote better health through prevention and coordinated primary care.

But George, who runs the Coffey Health System hospital in the southeast Kansas town of Burlington, said creating an ACO would be difficult in a rural setting with low population.

“I don’ think we can do it,” he said. “We don’t have the numbers. CMS (the federal Centers for Medicare and Medicaid Services) is saying you have to have a pool of at least 5,000 people to start an ACO for Medicare. We may have half that many in the whole county.”

Earlier this month, CMS issued a formal “request for comments” on how an ACO might function, how it could measure quality and how it could be financed. Comments are due Dec. 3.

An ACO assumes responsibility for coordinating a broad continuum of care designed to improve or maintain the health of a large number of patients.

Generally, an ACO would be paid a flat rate for each person in its care as opposed to billing for each procedure or treatment.

Because the care is closely coordinated and stresses prevention and chronic-disease management, it is expected to reduce emergency-room visits and return hospitalizations, which eventually would reduce costs.

Too risky

CMS plans to have several ACO pilot projects up and running by Jan. 1, 2012. Initially, the projects will be limited to Medicare beneficiaries.

“I can see how it could work in Wichita or Topeka or Kansas City,” George said. “But I don’t see how it could work in a small town. When you don’t have the (population) numbers, the risk is just too high.”

Susan Page, chief executive at Pratt Regional Medical Center, said the state’s mid-size hospitals – those between 25 and 200 beds – may not have the numbers either.

“I think moving toward an ACO – however you want to define it – is going to be more difficult in the rural areas than in the urban areas, just because of the numbers,” she said.

Page, a member of the Kansas Health Policy Authority board, said it’s too early to know how CMS’ move toward ACOs will affect the state’s rural hospitals.

“All of us, I think, are trying to learn more about this beast,” she said. “I know in our case, we’re just now starting to meet with our primary-care providers.”

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Time to explore options

Hospitals are not required to be ACOs.

“That’s one of the positives in the health reform law,” said Tom Bell, chief executive of the Kansas Hospital Association. “It gives everybody time to explore their options and I think this is going to be something that’s going to evolve over time. It’s not going to happen all at once.”

Bell said he expects CMS to develop a different ACO model for the nation’s rural areas.

“I’m already hearing people say how an ACO might work in a rural area because the population would be more homogenous than in an urban area,” Bell said. “It’s something to think about.”

Also, most of the state’s small hospitals – those with 25 or fewer beds – already are aligned with a regional hospital and perhaps could ban together to form regional care networks.

“Some, I think, would be well-poised to move in that direction,” said Janelle Moerer, vice president of business development at Via Christi Health, the state’s largest health care provider.

“The big issue really is going to be connectivity and electronic medical records,” she said.

At the Coffey Health System hospital in Burlington, George is considering a different approach altogether.

“My vision – as well as the vision of my board and of the Coffey County Commission – is what would happen if we partnered with Blue Cross to offer a Coffee County insurance plan?” George said.

A Coffey County plan

The concept, he said, would not be limited to Medicare beneficiaries.

“Instead of a General Motors’ plan or a state employees’ plan, it would be a Coffey County plan,” he said. “We have a lot of three- and four-person farm operations that can’t get group health insurance now. This would let them do that.”

A Coffey County plan, he said, could include incentives for encouraging residents to use their local health care system, which, in turn, would be responsible for coordinating their care.

George said he hopes to discuss the concept with officials at Blue Cross Blue Shield of Kansas.

“We’ve always said we need people to work together and to come up with new ideas,” said Mary Beth Chambers, spokeswoman for Blue Cross of Kansas. “I don’t know that this would be something that we would discuss publicly, but we’re always looking for innovative ways to improve the health care system within our borders.”

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