Are you hearing the buzz word: Accountable Care Organization?

Health Care Reform Series Part 1

 

 

Accountable care organizations take up only seven pages of the massive new healthcare law, yet has become one of the most talked about provisions.

An ACO is a network of doctors and hospitals that share responsibility for providing care to patients. Think of it as an umbrella of patient care.

In the new law, an ACO would agree to manage all of the health care needs of a minimum of 5,000 Medicare beneficiaries for at least three years to keep costs down by managing those patient’s medical care more efficiently.

Accountable care organizations will be largely based on physician practices that, in turn, may be organized as patient-centered medical homes. We will touch more in this in future blogs so stay tuned because this aspect will likely change.

Many ACOs will also include hospitals, home health agencies, nursing homes, and perhaps other delivery organizations.

There are at least five different types of practice arrangements that could serve as ACOs.

These are integrated or organized delivery systems:

·        Multi-specialty group practices

·        Physician-hospital organizations

·        Independent practice associations

·        “virtual” physician organizations

Question: What is the difference between HMO’s and ACO’s? 

Answer: The difference lies in the payment structure and level of provider risk involved. 

While HMO’s have typically been arranged around capitation, ACO’s recognize variation in regional health care markets and the ability of providers to accept new payment models.

ACOs wouldn't do away with fee for service but would create savings incentives by offering bonuses when providers keep costs down and meet specific quality benchmarks, focusing on prevention and carefully managing patients with chronic diseases.

In other words, providers would get paid more for keeping their patients healthy and out of the hospital

This is the theory behind ACO’s.  But will it really work this way?  And will this plan keep costs down? 

A study commissioned by the American Hospital Association estimates start-up costs for establishing an accountable care organization are many times higher than estimates from the Centers for Medicare and Medicaid Services.

Follow us in this journey of Health Care Reform.  The healthcare future is certainly changing and we will keep you up to date with any new developments.

What are your thoughts? Comments? Concerns?

David Coblitz (2011). Study: ACO’s Costs Higher Than CMS Says. Retrieved from: http://www.healthdatamanagement.com/news/aco-accountable-care-organization-study-aha-medicare-cms-42477-1.html?ET=healthdatamanagement:e1797:24923a:&st=email&utm_source=editorial&utm_medium=email&utm_campaign=HDM_Daily_051611

Jenny Gold (2011). NPR. Accountable Care Organizations Explained. Retrieved from:

http://www.npr.org/2011/04/01/132937232/accountable-care-organizations-explained%20%20(npr)

Don McCanne, M.D. (2010).  What is an Accountable Care Organization. Retrieved from: http://pnhp.org/blog/2010/07/09/what-is-an-accountable-care-organization/

Image by: Trouthout.org. (2011) Flickr.  Attribution-NonCommercial-ShareAlike 2.0 Generic (CC BY-NC-SA 2.0). Retrieved from: http://www.flickr.com/photos/truthout/4055996347/