In a recent NEJM post they discuss the ACO model. They state:
The ACO model is a reaction to the failure of both fee-for-service payment, which offers incentives to provide excessive services but not to devote resources to managing chronic disease or coordinating care, and capitated payment, which offers providers incentives to stint on care and take on more financial risk than many can handle. The ACO concept represents an attempt to control costs and improve the quality of care in ways that are more acceptable to patients and physicians than those associated with capitation. Built on a fee-for-service chassis, but with unrestricted patient choice, safeguards to prevent stinting on needed care, and quality standards, the Medicare Shared Savings Program attempts to avoid the pitfalls of capitation but still offer ACOs a financial upside if they reduce costs relative to a benchmark and report strong results on quality metrics.
The problem they are solving is the excess costs associated with the wandering patient who in the fee for service world goes from internist to cardiologist to nephrologiist etc. The typical example if the obese Type 2 Diabetes patient who if weight controlled would not have been a problem. But ACOs are thew darlings of the hospitals who see them as sources of more revenue. Take Partners Health in Massachusetts, it is the ultimate in an ACO. However it tends to put the old physician model out of business.
The article lays out some concerns:
One of the more controversial aspects of CMS’s proposed rule is its method of attributing beneficiaries to ACOs. In an effort to promote more organized care delivery without interfering with beneficiaries’ choices of providers, CMS opted for retrospective attribution...
Also controversial is the proposed system for sharing savings. Basing benchmarks on historical per-beneficiary costs means that ACOs that are already efficient will have to work harder to become more efficient.
The above chart however shows that the pressure is on since Medicare is due to run out of money. There are many problems with this approach:
1. If we increase Medicare from 3% to 4% the problem disappears for an additional twenty years. We have demonstrated that befoe.
2. The chart also assume that medicine never changes. No new procedures or medicines. That is clearly false. It is difficult to determine what will change but it would be at least worth the try.
The article concludes:
The other side of the coin, however, is a real risk that the bar is set so high that too few ACOs will apply. Noting the substantial investments required for ACOs to improve care delivery, some have concluded that the prospects for earning an acceptable return on investment are small and that CMS may have been too ambitious in trying to generate large savings in what is, in essence, a voluntary demonstration
This is the Berwick problem. Having an academic make these proposals, especially one with such close ties with Partners is at least problematic. ACOs are akin to HMOs, just of a different cloth. One suspects they will grow than the backlash will destroy them. The pain in between will be real.
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