Saturday, December 18, 2010

ACOs as "inside baseball"

Local hospitals and physician groups are talking about accountable care organizations (ACOs), the somewhat mythical structures that are envisioned in the Protection and Affordable Care Act (PPACA), also known as "health care reform."

I say "somewhat mythical" because ACOs do not actually exist. . . at least, not yet.

PPACA encourages providers to form ACOs so they can benefit by sharing a percentage of savings they generate for Medicare. An ACO, according to PPACA, is “an organization of health care providers that agrees to be accountable for the quality, cost, and overall care of Medicare beneficiaries who are enrolled in Medicare’s traditional fee-for-service program.”

The Centers for Medicare and Medicaid (CMS) says that ACOs may be started by physicians, by medical group practices, or by medical practice networks. They may be partnerships or joint ventures involving hospitals and physicians, or it may involve hospitals employing physicians.

I recently posted comments about hospitals that have bought medical practices to "align physician and hospital performance" for health care reform. Purchasing medical practices is a likely step toward the formation of ACOs in Central New York.

CMS says it will establish the ACO program one year from now -- on January 1, 2012. Right now ACO polices and standards are in the developmental stage. CMS has asked for public comments about ACO characteristics and functions. At a workshop in October, CMS (with the FTC and the OIG) promised to develop safe harbors for ACO structures. “Safe harbors” are legal structures that have automatic clearance from government anti-trust laws.

One of the confusing things about ACOs, as I understand them, is their invisibility to beneficiaries and patients. The providers who join an ACO would not apparently have to tell their patients about it. Nor would any patient be obligated to seek care only from the ACO providers.

ACOs are expected to save money by better care coordination, such as preventive care, early treatment, avoiding duplicate tests, etc. But Medicare beneficiaries would not know that their care is being coordinated within an ACO network. As CMS explains, “[a]ssignment [of the individual to an ACO] will be invisible to the beneficiary, and will not affect their guaranteed benefits or choice of doctor. A beneficiary may continue to seek services from the physicians and other providers of their choice, whether or not the physician or provider is a part of an ACO.”

Although not “enrolled” in an ACO, beneficiaries would somehow be “assigned” to one. Exactly how assignment might work is the subject to public comment – see the recent Federal Register (November 17, 2010).

It may seem that managed care plans, which have been around for decades, offer models for ACOs. But is that the case? Beneficiaries who are enrolled in managed care plans know it. They have "gatekeepers" who actively or passively coordinate their care, determining whether care is covered and which providers are eligible to provide the care. Managed care also presumably confers a vale for individual beneficiaries through lower premiums or co-pays.

If I understand the ACO concept correctly, providers will be responsible for the cost of all the care beneficiaries receive

- even if those beneficiaries don't know their care is being coordinated within an ACO network;

- even if beneficiaries are not obligated to get their care from the ACO's providers; and

- even if beneficiaries experience no personal advantage by being assigned to an ACO.

A recent white paper about the 30-year experience of managed care in California suggests that “efforts to apply care coordination techniques to the open choice . . . environment have not been successful.”

The author James Robinson, Director of the Center for Health Technology, recently told Modern Health care magazine that beneficiary choice poses a major obstacle to care coordination. He called it "the biggest challenge to ACOs. . .”

Discussing ACOs may seem a bit like talking inside baseball. This is an active topic within the health care industry. Decisions about player changes shape next year's baseball season. Watching CMS decision-making will help us understand the impact of ACOs on Medicare services and costs.


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