Did we already try ACOs?

Some say ACOs cannot work because they are too much like certain, failed managed care contracts of the 1990s. Some say ACOs cannot work because they are not enough like those managed care contracts of the 1990s. Some people are a little bit right even if everyone is a little bit wrong.

Rick Mayes and I sort it out in a new paper that appears in Health Affairs today. Below is the abstract. I’m preparing a longer summary of it as part of the remarks I’ll make at a Health Affairs forum held at the National Press Club this Friday. My remarks will also appear around 10AM on Friday on the AcademyHealth blog.

Abstract: A key issue in the decades-long struggle over US health care spending is how to distribute liability for expenses across all market participants, from insurers to providers. The rise and abandonment in the 1990s of capitation payments—lump-sum, per person payments to health care providers to provide all care for a specified individual or group—offers a stark example of how difficult it is for providers to assume meaningful financial responsibility for patient care. This article chronicles the expansion and decline of the capitation model in the 1990s. We offer lessons learned and assess the extent to which these lessons have been applied in the development of contemporary forms of provider cost sharing, particularly accountable care organizations, which in effect constitute a search for the “sweet spot,” or appropriate place on a spectrum, between providers and payers with respect to the degree of risk they absorb.

The full paper is gated, but please read it if you have access.


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