Sunday, October 20, 2013

Too Soon Old

Too soon old, too late smart is the old saying.  It applies to me when it comes to Accountable Care Organizations (ACOs).

ACO’s are provided for in the Affordable Care Act, a.k.a. Obamacare.  I assumed they described an organizational structure that could be held accountable for cost and quality because it included all the major components of care (particularly doctors and hospitals).  I was puzzled by the kinds of organizations that elected to be included, as well as by the kinds that did not, but thought that was just part of the fuzziness that typically characterized public programs.

I was particularly mystified when I learned that the Henry Ford Health System in Detroit (where I worked during the 1990’s) had not elected to be an ACO.   HFHS is a fully integrated system that includes hospitals, a salaried medical staff and a good-sized HMO.

Inquiring into that with a friend who still works there, I learned that the term ACO actually describes a financial scheme directed at providers that are financed primarily by fee for service.  If they elect to join, Medicare identifies the patients that are using them for primary care.  If those patients end up costing Medicare less than average and if certain quality goals are met or exceeded, providers get part of the savings.  If they cost more and fail to meet quality goals, providers get financially penalized.  Providers can elect different levels of reward and penalty, based on how much risk they are willing to expose themselves to.

So it is a game of sorts and providers decide whether they want to play or not.  Quite a few have taken the challenge but many have not.

The obvious intent is to incentivize providers to improve quality and control cost.  The organizational implications are presumably that efforts to do that will lead providers to more highly integrate the elements of care so that they can be held “accountable” for cost and quality.

We’ll see if it works.


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