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Ten Inconvenient Possible Downsides to Accountable Care Organizations: Details, details

Posted Oct 05 2010 3:02pm
Talk to any of the Disease Management Care Blog's doctor or administrator colleagues about the Affordable Care Act (ACA) and, faster than a specialist physician can tell a needy time-consuming patient to go away and "see your PCP," two panaceas will quickly come up: patient centered medical homes (PCMHs) and accountable care organizations (ACOs). The problem is that neither have been been conclusively shown to work in usual practice settings and, what's more, the ACO is still only a concept that even hasn't been even been tried.... anywhere.

Recall that ACOs can be defined as "provider collaborations that integrate groups of physicians, hospitals, and other providers around the ability to receive shared-savings bonuses by achieving measured quality targets and demonstrating real reductions in overall spending growth for a defined population of patients." As the DMCB has previously discussed , its luster is ultimately based on a bet that the efficiencies of integrated delivery systems can be exported to other settings. That's why the concept was written into the ACA for Medicare A and B ( go to page 277 to read all about it ).

While we all await the regulations that will detail exactly how ACOs will be approved by the Secretary of HHS, academicians, policymakers and wonks are continuing to ponder just how an ACO would - or would not - work. For an even-handed discussion of some of the problems that could undermine an ACO, check out Harold Luft's October 7 New England Journal article titled "Becoming Accountable - Opportunities and Obstacles for ACOs" ( on-line version not available at the time of this posting. link to follow ). If you're an administrator, Dean, VP for Medical Affairs, member of a hospital Board, physician staff member, group manager or any of the medical types that believe an ACO puts patients in one end while money comes out the other, you may want to think about the following inconvenient truths:

1. The regulations haven't even been written yet.

2. The ACO business model is largely based on benefiting from the "upside" of risk contracting, which protects against higher than expected "risk-bearing" utilization. This sounds like a no-brainer, until you consider that ACOs will "bear the up-front costs of organizational and cultural change." In other words, that upside will only materialize if quality and costs meet muster, but the far more important profit will only occur if that upside is greater than those up-front costs.

3. Ever hear of the "attribution rule?" ACO wannabes may want to study just how Medicare will assign patients to you when those regulations come out, because you won't be able to pick and choose. Once those patients are assigned, you'll want to know everything you can about their baseline utilization and quality measures, because that'll be what you need to beat to get that upside mentioned in #2 above.

4. And ACOs will also need to bet that Medicare will do a good job of "efficiently and rapidly" providing ongoing data on the attributed patients so that the system can react to unfavorable trends. Medicare's track record in the ill-fated Medicare Health Support pilot should make you pause .

5. And by the way, ACOs will need Medicare D data too, even though controlling pharmacy costs are not part of the deal. If you look around the room and realize that your ACO co-planners don't understand why pharmacy data are important, you may need to rethink the suitability of doing this in the first place.

6. Not all physicians - including primary care - are likely to be invited to participate in ACOs. That spells all kinds of trouble. Some docs may not want to participate, creating even more headaches.

7. Further complicating the relationship with the physicians is the overlap between their fee-for-service payments and the compensable activities - like complex visits, post-discharge care or hospice - that manage the upside risk. Should the docs be paid twice if there are cost savings?

8. Federal anti-trust concerns may prompt the decision to require multiple ACOs in one region, further complicating things. The DMCB wonders if adverse selection could occur.

9. "Outliers" may also become a term ACOs would like to familiarize themselves with. A few patients with unlucky and catastrophic health care costs can shift those average "attributable" Medicare charges, torpedoing that upside risk mentioned in #2 above. What's more, they may not be under your control if the Medicare beneficiary happens to be traveling out of region. Think what would happen to your business plan if a tour bus loaded with your "attributed" patients has an accident while visiting Branson ....

10 (while not brought up by Dr. Luft...) One key to increasing quality and lower costs will be active care management, typically controlled by non-physician health professionals, usually nurses. Creating a phalanx of care managers to coordinate outpatient care is typically outside the competence of the types that run clinics and hospitals. It remains to be seen if they'll be wise enough to outsource it, even if it does add to those initial up front costs.
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