Is an Accountable Care Organization in your future? Let’s hope so

The New York Times, March 13, 2012 contains an article on the growth of Accountable Care Organizations (ACO) spurred by the Affordable Care Act with regard to Medicare patients. The article says in part:

A.C.O.’s, as they are known, are collections of medical providers who band together under one business umbrella. The organization can include primary care doctors, specialists, social workers, pharmacists and nurses. The difference is in how these providers are paid: Instead of an insurance company or the government reimbursing each provider for each service provided to each patient, the A.C.O. is paid simply to care for a group of patients.

If the ACO can reduce the cost of caring for the patients while maintaining their health, it gets to keep and divide up some of the savings — a powerful incentive to do things differently, experts hope. But if the A.C.O. cannot meet quality measures and costs rise, the providers in the organization may well receive lower payments.

For those of you who have been around awhile this may sound strikingly like an HMO and in many ways it is. HMOs paid either salaries to physicians or a capitation, a fixed fee per patient per month to provide all needed care. One big difference with the ACO is that the patient is free to seek medical care outside the ACO at any time without prior approval. However, this freedom may be a shortcoming as it violates this main goal of coordinated care.

Medicare patients will be placed into an ACO without their knowledge and may never know their providers are within the ACO. ACOs are slowly growing for the non Medicare population as well.

Before you jump all over this as a violation of your Constitutional rights, consider the benefits to better coordinated, more efficient care. Forget the potential cost savings, what you should really care about is better health care, less duplicate tests and unnecessary care, more coordination among your doctors and other providers. Saving money is a side benefit.

Will the ACO model work? That is open to debate. However, in my view changing the system in this way is the last best hope before outright price controls as used in most other countries. The problem is that it will be a decade or more before ACOs are sufficiently widespread to measurably affect health care quality and cost for the general population.

HMOs failed because patients didn’t like closed networks and because we perceived skimping on care to save money (a sad commentary on the faith we put in our health care providers). Let’s hope the same questionable allegations do not kill the ACO before it gets a fair chance. Some providers see it unfair to place the financial risk mostly on providers and fear payments will be insufficient to cover costs. Only time will tell if we get it right this time.

Price fixing may save money in the short run, but it will do nothing to improve or perhaps even sustain our quality of health care.