The Obama Administration on October 20, 2011 announced its long awaited final rule for Accountable Care Organizations (ACO), a new program that is part of the 2010 healthcare overhaul that is designed to provide incentives on a voluntary basis for providers – physicians, medical groups and hospitals – to reduce costs and improve care under the Medicare program. An earlier version of the rule released month ago received a poor reception and little interest from providers. This revised final rule has somewhat fewer restrictions and requirements, and is being promoted as responsive to the expressed concerns of providers. There is also a new name – the Medicare Shared Savings Plan, and descriptions of other programs (Partnership for Patients, Bundled Payments, Comprehensive Primary Care Initiative, Pioneer ACO Models, Advance Primary Care Practice Demonstrations) that when taken together are meant to transform the Medicare program.
My view: The Medicare ACO program and many of the supporting elements described in the final rule are doomed to fail. The Administration’s claim of nearly $1B in savings over the next four years is ridiculous. It will never happen. At two recent meetings involving large numbers of senior executives from leading healthcare delivery systems, I asked those in the audience how many planned to pursue ACO’s. Out of more than 100 organizations, only a single hand went up, tentatively. I expect that, even with rule changes to reduce the requirements, there will be only a small number of delivery systems that pursue ACO’s.
As a former senior leader at the Medicare program and as someone who spent more than fifteen years in the private sector negotiating payment and risk arguments with hospitals and doctors, and in managing shared risk arrangements on the provider side, I can say that the federal government is not structured to directly manage complex ongoing business and financial arrangements with medical providers.
Further, it is impossible to construct a one size fits all rule building on the fee-for-service system that will work in hundreds of locations with tens of thousands of physicians across the entire United States. The ACO rule, with hundreds of pages in length and dozens of detailed requirements, is not the way to organize the payment of medical care for Medicare beneficiaries.
A far simpler and more straight forward approach would be to accelerate the growth of the Medicare Advantage Program, and to ensure that participating plans have the necessary quality and customer satisfaction goals and requirements. I can think of no reason why this should not be done to accelerate the growth of risk-based payment systems in Medicare, other than the inherent bias of liberal policy makers who seek to place ever tighter and centralized controls in the hands of Washington bureaucrats.
The Wall Street Journal - Medicare Program for Doctor Groups Gets Looser Rules - Dated October 21, 2011
ACO Final Rule Fact Sheet - New Affordable Care Act Tools Offer Incentives for Providers to Work Together When Caring for People with Medicare - Dated October 20, 2011