Many risks will come with shift to ACOs

No matter the precise structure of the accountable care organization (ACO) or network that they are joining or forming, it will be critical for hospital risk managers to carefully manage the risks associated with the transition to ACOs.

Some of the risks are outlined in a report from Marsh, a healthcare consulting company based in New York City. These are some highlights from the report, A New Risk Management Frontier: Accountable Care Organizations:

Establishing provider networks. Decisions about which organizations to partner with in the ACO structure — whether a joint venture, formal partnership, series of alliances, standalone entity, or another format — and how to share payments and expenses can carry significant risks.

Errors in the provision of non-medical professional services, including the distribution of shared savings across the network, and other risks could lead to antitrust allegations; contractual liabilities; and lawsuits from patients, competitors, and regulators. If mergers and acquisitions are involved in the formation of the network, participating organizations also could face transactional risks.

Entering into payor contracts. Depending on the structure of reimbursement agreements with the government and various benefit plans, an ACO could assume additional risks. Examples include the risks related to the pricing of medical services, contract mismanagement for member providers, or incurring medical expenses in excess of agreed capitation levels.

Developing transitional care models. Transitioning to accountable care will require new behavior on the part of healthcare professionals to ensure coordination of care — including moving patients from one part of the network to the next — and sharing of information across the network. In the long run, this sharing of information is likely to benefit patients and improve the quality of care provided. But in the short term, realigning organizational resources (including personnel), redefining measurements to track patient care and expenses, and establishing new processes and best practices could increase the risk of errors in delivery of medical services.

Sharing of data. A critical component of achieving better patient outcomes through an ACO is the sharing of electronic medical records and other data across the network. But with more parties handling such data, including service providers outside of the formal network, the risk of a data breach grows. Even before the push toward accountable care, healthcare organizations that had been victimized by data breaches were well aware of the costs related to a data breach, including those related to patient notification, potential government fines imposed under the Health Information Technology for Economic and Clinical Health Act (HITECH) and the Health Insurance Portability and Accountability Act (HIPAA), and litigation.

Physician integration. Whether through direct employment, provider service agreements, or loose affiliations, a key component of the transition to accountable care is the integration and alignment of physicians with hospitals. Depending on the nature of their agreements with physicians, hospitals and the ACOs in which they participate could face added risks, notably medical professional liability (medical malpractice) exposures.