The ACO model for senior care

In one form or another, the question of how far central government should go in paying for and controlling the delivery of Americans' critical services has been the source of heated and recurring debate for many decades. Nowhere is it more at the forefront today than in the medical arena.

With the passage of the Affordable Care Act (ACA) and its follow-on legislation, the federal government has issued new, specific means and incentives for containing healthcare costs and improving patient outcomes.

Accountable Care Organizations (ACOs) are the primary tool for implementing Medicare cost reductions under the ACA. Centers for Medicare and Medicaid Services (CMS) defines ACOs as "groups of doctors, hospitals and other health care providers, who come together voluntarily to give coordinated high quality care to their Medicare patients." These providers take on the risk/reward proposition associated with patient outcomes.

If you are having a Déjà vu moment, yes, this is an exhumed Health Maintenance Organization of sorts, but this time, driven and managed by the federal government. And as with most voluntary government programs, there are drawbacks: those who don't form or join an ACO by 2019 will see reduced Medicare reimbursements.

With between 37-43 million Americans in an ACO today, we can draw some useful generalizations defending and opposing the concept.

Arguments in favor

1. The ACO model is consistent with the drive for evidence-based medicine, aiming at reining in indiscriminate specialist visits, therapies and ER visits, and returning the PCP to quarterback role.

2. Physician incentives are tied to taking a 360 degree view of the patient, utilizing healthcare informatics to make better-informed, better-coordinated decisions, while minimizing costs.

3. Physicians could gain valuable access to more patient information, driving better outcomes.

4. With ACO incentives to keep patients out of the hospital, there are long-term disincentives for hospitals to overbuild and then over-admit to cover overhead.

Arguments against

1. The theory supporting ACO reward system has yet to be borne out. 16 of the 35 pioneer ACOs have abandoned the model. A minority of physicians are actually receiving rewards, and those who are, worry that the cost thresholds for those rewards will be lowered like a limbo bar once they produce greater savings.

2. Physicians take on the financial risk, yet those who serve lower and higher risk demographic populations are treated the same, driving a cherry-picking of patients.

3. ACOs further put physicians in the position of prescribing therapies, medication, surgeries, etc., based on incentives versus what they think best for their patients.

3. The model encourages consolidation into monopolies, and their power over a geographic market may drive price increases.

4. The administrative burden is costly. ACO regulations are predictably complicated, replete with reams of acronyms, indices and arcane formulas. Both on a national and individual ACO level, the cost-savings realized may be offset by the ever-growing bureaucracy that this oversight creates.

While few argue against the benefits of better coordinated and more evidence-based patient care, the chief deterrents to ACO success are the same as with other bureaucratic solutions to free market problems: complexity, moving targets, burgeoning administrative burdens and decisions made by people who are removed from the core activity.

Overlaying this landscape is a volatile, polarized American public, with nearly half voting their disdain for big government and the rest demanding that government do more to take care of them. While Trump and Cruz swear they will repeal the ACA on day one, Hillary, as author of the first go-around, pledges to expand it. 2017 may be a pivotal year for the healthcare industry, as ACA is either radically pulled back or cemented into the American fabric.

http://www.athenahealth.com/knowledge-hub/aco/accountable-healthcare

http://www.aapsonline.org/index.php/site/article/why_accountable_care_organizations_are_failing/