Labs Learn About ACOs And Medical Homes

Major healthcare reforms take center stage during the Executive War College in New Orleans

IN JUST SEVEN MONTHS, the age of accountable care organizations (ACO) begins. On January 1, 2012, the Centers for Medicare and Medicaid Services (CMS) will commence contracting with ACOs.

ACOs are one of the major reforms spelled out in the 2,700-page health reform law that President Obama signed into law on March 23, 2010. Thus, it should be no surprise that there was keen interest in the special extended session about ACOs, Medical Homes, and Value-Based Contracting that took place at the Executive War College on Laboratory and Pathology Management earlier this month.

Growing numbers of clinical laboratory executives and pathologists are realizing that their lab organizations must have a viable strategy to respond to ACOs and similar ObamaCare mandates. In coming years, these new healthcare delivery models can be a threat to stable laboratory finances if fees for lab tests are cut significantly.

On the other hand, clinical laboratories that step up and offer enhanced value to physicians practicing in ACOs, medical homes, and similar forms of integrated health delivery models may be rewarded by reimbursement that reflects the added value that such lab testing services contribute to improving patient outcomes while reducing the overall cost per episode of care.

It is this heightened interest in the consequences of the coming healthcare reforms that is one reason why attendance at this year’s Executive War College—conducted on May 3-4 in New Orleans—was at record levels. More than 700 senior-level laboratory executives, administrators and pathologists were in attendance. More remarkably, almost 50 individuals showed up on site to register and attend during the 24 hours leading up to the start of the 16th Annual Executive War College!

Sales of Medical Practices

Since passage of the ObamaCare legislation in early 2010, many hospitals and health systems have declared their intention to create and operate ACOs. To that end, these hospitals and health systems are purchasing physician practices at a brisk pace.

This has not gone unnoticed by clinical laboratory executives and pathologists. Each time a hospital purchases a medical practice, that new hospital owner can dictate to the physicians in the group as to the specific clinical laboratory they must use. This is a short-term market challenge for laboratories and will be superceded by the long-term market challenge of how laboratories can profitably serve accountable care organizations and medical homes.

To help pathologists and laboratory administrators at this year’s Executive War College understand the forces to be unleashed by the ObamaCare reforms, expert speakers on these topics participated in a special general session.

Discussion of ACOs

Leading off this panel of speakers was Thomas Williams, Ph.D., MBA, who is Executive Director of the Integrated Healthcare Association (IHA), based in Oakland, California.

The IHA has been an active player in California’s major pay-for-performance program during the past decade. It recently published a White Paper titled “Accountable Care Organizations in California: Lessons for the National Debate on Delivery System Reform.” A PDF of this document can be downloaded at

Williams was forthright in discussing the three decades of experience with forms of ACOs that operated in California during that time. “Keep in mind that ACOs are generally organized around three characteristics,” he said. “There will be a performance measurement for quality and cost. Next, the ACO will publicly report on its performance. Third, linked to the performance of the ACO will be incentives and penalties.

“To meet the requirements of coordinated care, most ACOs feature four characteristics,” continued Williams. “They are: 1) population management; 2) coordinated care processes; 3) a structure that includes electronic health records, registries, and staff; and, 4) continuous quality improvement (CQI).

“Studies of integrated delivery systems that act like ACOs,” added Williams, “demonstrate that worthwhile improvement happens when these organizations combine substantial organizational and financial capability with strong leadership, a culture of improvement, and alignment with key payers.”

Uses 0f Lab Test Data

In discussing how laboratories could add value to physicians practicing in an ACO, Williams noted that “there are ways that laboratory test data can be used retrospectively to measure performance. For example, 13 of IHA’s existing measures can be developed from laboratory test data, including cervical cancer screening, LDL-C screening, and HbA1c tests.

“In California, it was recognized that there was a need for data standards to increase efficiency and reduce errors in data exchange,” he continued. “CALINX standards were developed to be a uniform set of standards for lab test data that can be used by providers throughout the state.”

Williams was upbeat on the potential for laboratories to deliver value to ACOs. But he did have some words of caution. “Measuring and incentivizing providers for the total cost of care and quality is a potential game changer,” he observed. “This will be uncharted territory as government health programs and private payers strive to find the right formulas for provider compensation.”

Medical Homes

Medical homes was the next emerging model of integrated care to be addressed at the Executive War College. Speaking to this topic was James M. Crawford, M.D., Ph.D.

Crawford is the Professor and Chair, Department of Pathology and Laboratory Medicine and Senior Vice President for Laboratory Services at North Shore-Long Island Jewish Health System (NS-LIJ), in Lake Success, New York. He also chairs the working team at NS-LIJ that is developing the health system’s medical home program.

“In general terms, the ‘patient-centered medical home’ describes the service rendered by a primary care practice,” stated Crawford. “By contrast, the ‘advanced medical home’ is used where specialists may be delivering integrated care, including primary care, to a patient.

“A third term is the ‘patient-centered medical home,” he added. “This describes continuity of care through all sites.”

Crawford emphasized that clinical information is the cornerstone for making the medical home care model succeed. More than that, Crawford predicts that pathologists and laboratory scientists are uniquely positioned to leverage that information on behalf of patients and physicians.

But this opportunity requires pathologists and clinical laboratory managers to be proactive if they are to play a part in a medical home. “The laboratory cannot be retrofitted into the Medical Home and ACO models,” Crawford warned the audience. “For your laboratory to participate in a value-contributing role, you must participate in the design of that integrated care organization to pre-establish your value.”

Crawford was bullish on the potential for pathologists to add value to medical homes and ACOS. “Among other things, pathologists and laboratory administrators should actively seek participation in demonstration pilots for patient-centered medical homes (PCMH), Coordinated Care, and electronic health record (EHR) deployment,” he advised.

“Find the ‘strongest signal’ in your local healthcare environment and work with those stakeholders,” continued Crawford. “During this time of reform and change, stay active with these organizers so that you can make your own business future.”

Value of Laboratory Testing

In his remarks about ways that laboratories can contribute value to ACOs and Medical Homes, pathologist George D. Lundberg, M.D., had specific comments. Currently Lundberg is Editor in Chief of Cancer Commons, and Editor at Large of MedPage Today, Collabrx, based in Los Gatos, California. Lundberg is widely recognized for his 17 years as Editor of The Journal of the American Medical Association (JAMA).

As clinical laboratories and pathology groups face the creation of new models of integrated care, Lundberg had blunt advice. “It is our opportunity and responsibility to preserve the best, and scuttle the worst, and build a new laboratory testing service,” he stated.

Lundberg recognized that the laboratory medicine profession has traditionally been a quiet clinical service. That needs to change if laboratories are to play a greater role in delivering high-value lab testing services to ACOs and Medical Homes.

Striking a theme familiar to most laboratorians, Lundberg described the roles of Ordering, Interpretation, and Action and how each contributes value to the physician and the patient. “Clinical laboratory tests that matter are those that lead to actionable information that helps physicians improve patient health,” he concluded.

At Executive War College, Speakers Provided Useful Insights about ACOs and Medical Homes

Tom Williams, Executive Director of the Integrated Healthcare Association in California, provided information about Accountable Care Organizations:

Performance Measurement of ACOs under CMS Proposed Rules

Under proposed ACO rules, there are 65 performance measures that ACOs must collect and report in order to qualify for shared savings and they fall under these five domains:

  • Patient/Caregiver Experience of Care
  • Care Coordination
  • Patient Safety
  • Preventive Health
  • At-Risk/Frail Elderly Population

CMS – Proposed ACO Shared Savings

  • Shared savings bonus potential determined by total cost of care for Medicare population
  • ACO receives points based upon results for 65 quality measures
  • Shared savings bonus potential modified by level of quality points

James M. Crawford, M.D., Ph.D. Professor and Chair, Department of Pathology at North Shore-Long Island Jewish Health System (NS-LIJ), identified value points associated with medical homes that play to the strengths of pathologists and clinical laboratories.

Assisting in Patient Management:

  • Pre-visit planning (Laboratory testing*, Radiology testing, Dietary restriction)
  • Patients needing clinical review or action*
  • Monitoring patients on specific medications
  • Patients needing reminders for preventive care, specific tests, follow-up*
  • Patients who might benefit from care management support*

Assisting in Population Management:

  • Integrated clinical data from all care sites*
  • Integrated ancillary data (e.g., all laboratory tests, all referrals*
  • Healthcare Resource utilization, including:

Physician office visits, use of ancillaries, need for acute care*

Real-time tracking of Claims data,* to include use of Pharmaceuticals*

  • Real-time tracking of Safety and Quality Outcomes*
  • Real-time tracking of the Patient Experience*
  • Disease Management Outcomes*
  • Biometrics (e.g., weight, body-mass index, blood pressure)*
  • Laboratory values as primary data on patient status (e.g., HbA1c, lipids)*
  • Data on Lifestyle management (e.g., activities, dietary education)*

*Pathology: source of primary data or potential coordinator


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