The value of Accountable Care Organizations (ACOs)

Washington has been touting Accountable Care Organizations (ACOs) as the end-all solution to health care’s woes. Designed to reduce Medicare spending and increase care coordination across a large number of patients, members of an ACO – hospitals, primary care physicians, specialists – would be paid if and when their patient population received outstanding quality of care. However, as the Centers for Medicare and Medicaid Services (CMS) finalize their ACO regulations, many both inside and outside the Beltway are beginning to wonder: Where’s the value?

Although ACOs have been flaunted as the cost containment solution to the government’s burgeoning Medicare spending problem, several organizations – who advocate for the ACOs’ core values of patient-centered, coordinated care – have raised red flags around ACO implementation.The American Hospital Association (AHA) highlighted the extraordinary costs required for systems to implement the ACO model; and a coalition of multi-specialty groups participating in CMS’ Physician Group Practice (PGP) Demonstration Program submitted comments to CMS expressing dismay in the low cost-savings associated with ACOs and their burdensome quality measures. These concerns are joined by others who say the program favors large, urban healthcare providers and that it is simply a rebranding of the unpopular HMO program of the 1990s.

The fact is there is little benefit for hospitals or physicians to join an ACO. Medicare spending may be on the rise, but Medicare patients account for only a small percentage of a provider’s reimbursement. Coupled with a patient’s ability to “opt-out” of participation and thereby undermining the provider’s ability to coordinate care, the ACO program is a flawed one at best. And for Emergency Physicians, who would be deemed unnecessary under the ACO model, there is even more reason to fear how they fit into the proposed system. In fact, emergency physicians could be pivotal in efforts to reduce unnecessary admissions and to improve coordination of hospital and out-patient medical care.

Fortunately, the core values of ACOs are being recognized as important by health plans, healthcare providers and groups of independent physicians who are forming ACO-like organizations for the larger number of commercial patients that focus on value rather than simply on accountability. These are really the Value Care Organizations or VCOs of the future.

Physicians have pushed for the need to improve and better-coordinate care for ages; and since doctors are frequently on the front line when a patient seeks help, it makes sense that they would understand the best course of action for the patient in question – eliminating excess waste along the way and reducing costs to both the provider and the patient. Such a concept takes the coordination of care out of the hands of administrators and back into the hands of doctors and patients. What a truly revolutionary idea!

The idea of a physician-led and health plan supported Value Care Organization, rather than a government sponsored Accountable Care Organization, seems like it could be the real solution to the healthcare crisis.

Ellis Weeker is an emergency physician and contributor to ER Forum.

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  • John Henry

    Just a re-branding and re-formulation of bundled-fee capitation, with the providers, AKA “ACOs,” at risk. What it will likely become is the bottom tier of the devolved system to come, with the top tier an opted-out market of direct-pay, cash-only private practices using the variety of approaches becoming more popular, some by subscription, some not, some boutique, others not so much, but all of them outside of the grasp of third-party predation.

  • Charles Timothy Richardson

    I agree with John Henry but not with the negative rhetoric – some of the most coordinated and cost-saving care models come from large insurance groups, not doctors or hospitals.

    Utimately, the problem with the ACO Shared Savings model is that it depends on ever-increasing savings benchmarked to “last year’s” costs – at some point population “health” will reach a steady state and there will be no more savings. Then, where will be the incentive for providers and hospitals to participate?

    By then, we will all be on full-risk capitation. The  difference, I think between ACOs and HMOs is the three-year “shared risk” period with two risk tracks to choose from.

    In the beginning, the only way to protect ACO’s and payers from “rouge specialists” will be to put most of the specialists on salary and drive the rest of them out of their practices.

    Cash-pay, concierge and boutique practices will service the segment of the population that demand hand-holding and diagnostic imaging for uncomplicated lower back pain and coughs.

    Spain has this type of system: hospitals are typically places you don’t want to go to but small private practices are flourishing.

    The WHO ranks Spain #4 in the world for health outcomes and cost.

    Tim Richardson, PT

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