What are Accountable Care Organizations- the Short Version

Is the term “Accountable Care Organization” doctorspopping up in your conversations about health care and insurance? Accountable Care Organizations (ACOs) are on the horizon, so it’s important to know what they are. Accountable Care Organizations are groups of doctors, hospitals, and other health care providers, who are coming together voluntarily to give coordinated care to their Medicare patients. An ACO agrees to manage all of the health care needs of a minimum of 5,000 Medicare beneficiaries for at least three years. The goal of ACOs is to avoid unnecessary duplication of services while delivering quality care. Health care providers can assemble their own ACOs.

This concept is part of the new health law—born from the Medicare Shared Savings Program. This Program encourages cooperation among providers to improve the quality of care for Medicare Fee-For-Service beneficiaries. It aims to reduce unnecessary costs associated with the traditional system (i.e. doctors and hospitals are typically paid more when they order more tests and do more procedures). ACOs will create savings incentives by offering bonuses when providers keep costs down. However, there is more to the equation: the focus must be on prevention and carefully managing patients with chronic diseases.

What are the Proposed Benefits of ACOs?

According to the ideal model, ACOs should benefit patients and providers. For patients (or beneficiaries), ACOs are designed to improve outcomes and increase value by:

  • Promoting accountability for care given by all providers
  • Requiring coordinated care for all services provided
  • Providers would get paid more for keeping their patients healthy and out of the hospital

ACOs will need to prove that the overall health care product they’re delivering works well and costs less to encourage patients to participate. When an ACO succeeds in both delivering high-quality care and spending health care dollars more wisely, the Shared Savings Program will reward them monetarily.

Can Patients Still Choose their Own Providers?

Yes. Patients are still free to see doctors of their choice outside the network without paying more. Primary care doctors are required to tell their patients if they are part of an ACO. Most likely, physicians will refer patients to hospitals and specialists within their ACO network.

What are the Cons?

According to health care industry experts, ACOs sounds a lot like HMOs—which limit patient options and created a consumer backlash in the 1990s. Economists fear that the race to form ACOs could have a negative impact by encouraging hospital mergers and provider consolidation. As hospitals become integrated, many are joining forces and purchasing physician practices. This leaves few independent doctors. In a nutshell, the greater market share can drive up health costs. Legal concerns have been raised that ACOs could violate antitrust and anti-fraud laws, while driving up health care prices.

Forbes Magazine on the subject of ACOs: “A rapidly emerging health care delivery system that rewards doctors and hospitals for working together to improve quality and rein in costs is serving roughly 10 percent of the U.S. population.”

Stay tuned to our blog  for the latest developments on Accountable Care Organizations. We will keep you updates as health care and legal experts weigh in on this new health care delivery model.

References:
Centers for Medicare and Medicaid Services
http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/sharedsavingsprogram/index.html?redirect=/sharedsavingsprogram/

NPR- Health News & Analysis (National Public Radio)
http://www.npr.org/2011/04/01/132937232/accountable-care-organizations-explained

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