On April 1, the Department of Health and Human Services released the much-anticipated ACO (accountable care organization) guidelines – to a degree of hype that one health IT executive said “could begin the redefinition of our nation’s healthcare system.” Along with such glowing remarks, however, are a handful of shortcomings that others would like to see addressed.

Anil Kottoor, CEO of Tampa, Fla.-based health IT vendor MedHOK (who also heads up the company’s healthcare policy practice), weighed in on both sides and more during an e-mail exchange with Government Health IT Editor Tom Sullivan.

Q: So, Anil, let’s start with the good within the ACO regs.

A: While it will take months for many organizations to fully digest them and there will be many unanswered questions, at least (the Centers for Medicare and Medicaid Services) and HHS have painted a solid picture of what they want to see from what is one of the most far-reaching Medicare reorganizations since managed care was introduced.

The regulations show that CMS and HHS are taking this reform very seriously and plan on holding organizations that participate accountable for cost-savings and quality. Agency leadership seems to see ACOs as an alternative to full-fledged managed care, one that can take a huge bite out of existing Medicare costs if done right. The quality mandates over time are very significant and draw from experiences CMS has had in many areas, including physician quality reporting, hospital quality reporting, Medicare Advantage (MA) Star reporting and MA Special Needs Plans mandates. That ACOs would have to pass the dual tests of saving money and proving quality over time is rigorous and Medicare beneficiaries should see a better system in the future because of it. It will require ACOs to find ways to clinically and operationally integrate with all providers in the Medicare system that have not been seen before. For example, the ACO is held responsible for poor hospital outcomes, so ACOs, physicians and hospitals will have to work together to monitor hospital stays and after care.

Q: And the weaknesses, what are they?

A: There are a number of areas that lack clarity and will need responses from CMS and HHS. The enrollment system is a bit perplexing and could lead to issues with overall membership wherewithal and potentially a lack of actionable data to improve outcomes and reduce costs. The enrollment system can best be described as “passive enrollment” with doctors informing beneficiaries that they are associated with an ACO and allowing beneficiaries to opt out by choosing another doctor.

Beneficiaries could also stay on with the doctor but opt out of data-sharing. Since sharing data is key to overseeing patients and clinically managing them, I see this as a concern. Since traditional utilization management will not occur, case and disease management will be key, but how can ACO case managers and physicians manage the patient without actionable data?

Also, the universe of beneficiaries used to set savings targets (more retrospective) and to monitor beneficiaries through data-sharing and mining (more prospective) may not be the same. This could lead to issues in terms of assessing whether an ACO truly saved Medicare dollars.

Q: Now, onto the otherwise: With ACO, CMS health IT and quality efforts are very closely aligned. What does that ultimately mean for the providers that have to implement these regulations?

A: CMS and HHS are approaching this wisely. They have pursued a number of health IT initiatives over the past several years, including Medicaid and Medicare grants for EMR initiatives and the national health information network. The goal is to reduce medical errors, lower duplicative costs and try to give as complete a picture of the patient as possible. While this will take years and needs to be better-coordinated, CMS and HHS understand that this is the only way to truly improve quality in the system. The alignment makes perfect sense. It also means providers will be held more accountable for outcomes. Health IT is really the glue that holds all this together. To be successful, an ACO must tie all providers together so that they can share, in real time, clinical and administrative information. They need to be able to track patients to know where they are along the continuum of care at any point in time and intervene. That is essential.