The Race for the ACO

Scheduled to launch in January of next year, PPACA's ACO initiative is not yet upon us – but hospitals and doctors are already rushing to form these accountable care organizations. Why? Because they promise to provide health services for Medicare clients in a way that is both consumer- and doctor-friendly. As set forth in the bill, doctors and hospitals that participate in ACOs will receive financial incentives for providing quality care to Medicare beneficiaries. Patients, so the plan goes, will get better, simpler, and more affordable access to care.

Sometime early this year The Centers for Medicare and Medicaid Services will release new rules regarding the operation of ACOs. Until then, here's the rundown of the way this new service will work.

• Each ACO will be comprised of a network of doctors and hospitals that will share responsibility for patient care. An ACO will handle health care for at least 5,000 Medicare beneficiaries over a minimum of three years.
• ACOs will bring together all the various aspects of patient care, so that clients will no longer need to assemble a comprehensive network of providers themselves. Services provided will include primary care, specialist care, home health care, and hospital care.
• As initial ACOs begin to form prior to the January 2012 initiative date, some networks are announcing their intent to provide services for clients with private insurance, in addition to those designed for clients on Medicare.
• The hope for ACOs is that they will contain costs by encouraging providers to maintain certain standards for quality of care and keep costs down. This will happen with an increased focus on prevention and on managing clients with chronic diseases, which will hopefully keep patients healthier and hospital visits less frequent.
• Patients will still be able to see doctors outside of their ACO network, although doctors will be likely to refer them to others within the network.
• At this point, plans are still vague regarding who will run the ACOs. Most likely, it will be some combination of hospitals, doctors, and insurers, depending on the individual resources of a given region. Multispecialty physician groups, large hospitals, and insurers like United Healthcare, Humana, and Cigna have all announced plans to launch ACOs.
• The main difference – and main benefit – of the ACO vs. its cousin, the HMO, is that patients will have the opportunity to leave the network, thereby protecting against the kind of patient control that has spawned an HMO backlash in recent years.
• The risk, of course, is that ACOs could speed up the consolidation of hospitals, thus giving networks more pull in negotiating pricing with insurers and potentially driving up health costs. Greater integration naturally leaves fewer independent hospitals and doctors. Somewhat pacifying, if not reassuring, is that this type of consolidation is already occurring so frequently that the risk is present with or without ACOs.
• Another natural risk for doctors and hospitals is the threat of breaching antitrust laws. The Federal Trade Commission is currently attempting to clarify antitrust rules for ACOs, and the U.S. Justice Department's antitrust division has said they will expedite the ACO antitrust review process.

[Source: Kaiser Health News]