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Accountable Care Organizations

By August 11, 2010Commentary

Two primary complaints about the current organization of the US health system are that it pays doctors on a fee-for-service basis which may encourage delivery of unnecessary services and that in many cases there is little coordination of care among physicians treating the same patient or between physicians and facilities such as hospitals.   One proposed cure for these problems is use of accountable care organizations, which are specifically mentioned in the health reform law as a future option for Medicare beneficiaries and as a demonstration project for Medicaid.  Health Affairs and the Robert Wood Johnson Foundation have put out an issue brief on ACOs.  (HA/RWJ Brief)

The brief briefly describes the history of the concept of an ACO, including the capitated IPAs which were forerunners.  The authors list five possible delivery systems which could become an ACO.   The Medicare ACOs established by the reform law are explained.  These ACOs would be an option for care receipt, but beneficiaries would not actually enroll in them and may not even know they are in one.  Patients would be viewed as assigned to the ACO if they get most of their care from the affiliated providers.  Fee for service payment would continue to be used, with other methods such as capitation an option at HHS’ discretion.  ACOs would need to meet certain quality standards and could get incentive payments for quality outcomes and for having cost growth below that of  the average Medicare per capita increase.  ACOs would sign three year contracts and have to serve at least 5,000 beneficiaries.

As the authors note, it is not clear that the structure set up in the law can result in much better care or lower costs.  If beneficiaries aren’t enrolled and don’t have some obligation to seek care in the ACO, it is going to be harder to coordinate and control care.  If fee-for-service reimbursement is part of the problem, that isn’t changing.  The ACO concept could have unintended consequences, such as expanding the bargaining power of providers by encouraging consolidation and increasing market share of large systems.  It is likely to be many years before a significant portion of the population is covered by an ACO, so whatever their effects are, good or bad, those won’t be known for a long time.  Meanwhile, costs keep rising.

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