• Accountable Care Organizations: Great Idea. Will the Big Guys Actually Sign Up?

    The following is a guest post by Harold Pollack, the Helen Ross Professor of Social Service Administration at the University of Chicago.

    ACOs are one of the most important delivery reforms included in last year’s health reform. As TIE readers already know, there are many good reasons to believe that granting providers greater incentives to manage health outcomes and cost would improve both quality and cost-effectiveness of patient care.

    The federal government recently delivered draft regulations describing the terms under which Accountable Care Organizations would operate and be paid.

    Admired organizations such as the Mayo Clinic, Kaiser Permanente, and Geisinger Health System provide early models of what an ACO might look like.  There’s only one problem. It’s not clear that these organizations want to play along. After seeing the proposed regulations,

    …an umbrella group representing premier organizations such as the Mayo Clinic wrote the administration Wednesday saying that more than 90 percent of its members would not participate, because the rules as written are so onerous it would be nearly impossible for them to succeed.

    “It’s not just a simple tweak, it’s a significant change that needs to be made,” said Donald Fisher, president of the American Medical Group Association, which represents nearly 400 large medical groups around the country providing care for roughly 1 in 3 Americans. Its members, including the Cleveland Clinic, Intermountain Healthcare in Utah, and Geisinger Health System in Pennsylvania, had been seen as the vanguard for accountable care.

    The medical groups say they are worried they will be left holding the bag for losses, that the government has designed things so there is no easy way to tell which patients are part of the program, and that there’s no reliable way to adjust for patients who are sicker and require closer follow-up and more expensive treatments.

    Sympathetic experts such as such as Michael Millenson and Steven Lieberman raise similar concerns. In addition to Lieberman’s piece, you can get a sense of the complicated implementation challenges from this “Learn from the Experts” conversation we conducted at Doctors for America with Henry Aaron and Randy Fenninger.

    These details need to be fixed. Unfortunately, this is precisely the kind of technical and politically sensitive midcourse correction that’s hard to navigate within the current gridlock and partisan acrimony. It’s emblematic of the current impasse that the challenge is being described as a potential setback for “President Obama’s main idea for getting quality care.” It’s actually a challenge facing any sensible Republican or Democratic effort to address the inherent shortcomings of fee-for-service medicine.

    I hope that at least some of the negative initial reaction reflects the usual woofing of provider negotiation, and that CMS has sufficient leeway to accommodate legitimate provider concerns. This is precisely the kind of thing that affected stakeholders, Republican and Democratic policy elites might sensibly negotiate out of public view. In the present polarized moment, that’s just a heavy lift for everyone in this exchange.

    In the long-run, ACOs must encourage greater fiscal discipline, and impose greater provider accountability for cost, quality, and health outcomes. I wonder, though, if the best short-term strategy is somewhat less disciplined. There will be ample time to constrain providers once these complex and daunting organizational forms come into being. Government, providers, even patients have much to learn in getting these arrangements right. Most of the time, I’m a believer in the need to squeeze providers. Not in this case. At least not right now.

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    • The Mayo, Cleveland, and Geisinger systems are already models of health care delivery. Reform efforts in those locations are unlikely to achieve any true savings or quality improvement above what the systems already achieve over time.

      Encouraging them to adapt reforms is analogous to encouraging A-students to adapt the latest methods for studying and test prep.

      ACO’s should be designed with enough flexibility and incentives to encourage the participation of hospital/ organizations on the other end of the cost and quality spectrum. I will be more inclined to consider ACO’s as potential “game changers” when organizations in the high spending regions of Boston, New York, Los Angeles, Miami, and McAllen begin implementation.