QUALITY: A Thoughtful Critique of ACOs

In case you missed the ‘Space' section of your daily paper a few months ago, two planets -- one the size of Mercury and one the size of our Moon -- collided in a far off solar system.  The smaller planet went the way of Alderaan. The larger planet suffered a big dent.

My own worlds collided this week when former-professor-in-my-department Kelly Devers teamed up with my former boss (on a research project) and friend-of-the-blog Robert Berenson to publish a thoughtful critique of the panacea fever surrounding Accountable Care Organizations (ACOs).  As much as we have trumpeted ACOs as the best cure-all since Clark Stanley's Snake Oil Liniment, Drs. Devers and Berenson's thoughtful analysis published by RWJF is a welcome contribution to the dialogue.

This document succinctly summarizes much of the ACO literature, including articles by the authors' colleagues Steve Shortell and Larry Casalino, as well as Elliot Fisher and MedPAC.  Drs. Devers and Berenson believe that working on ACOs solves the problem of whether to tackle payment reform or delivery system reform first: work on both and grow the two initiatives together over time.  Additionally, they think the ACO model can take many forms, making it more likely to succeed in the various diverse U.S. health care markets.

The ultimate hurdle that ACOs face is one we already deal with in health care finance: taking incentives to the extreme, will providers get paid more for doing more (fee-for-service) or get paid more for doing less (capitation)?  ACOs could be modeled under both forms.  The authors argue that we could end up facing the same cost dilemmas we are currently dealing with, despite the promise of shared savings programs (in fee-for-service) or population based payment (partial capitation).  While increased coordination of care will help saving money at the margins, it might not be enough to meaningfully bend the cost growth curve. 

One blended approach they briefly reference is the independent practice association (IPA).  IPAs offer a mix of both methods: the IPA receives a per member per month capitated payment from the health plan, but the affiliated clinician receives a fee-for-service payment.  (For more on IPAs, see my paper with Health Policy Program Director Len Nichols on Hill Physicians Medical Group here.)  Could this sleeping giant hold the keys to real delivery system reform -- a way to bring ACOs to providers not yet ready to leave the fee-for-service world?  Physician-Hospital Organizations, profiled by me last week here, could also be a semi-autonomous model for ACOs. 

The point of the Devers/Berenson paper is to explore how we could get ACOs to work.  But it's good to keep in mind this recent story from Kaiser Health News that lists successful Medicare demonstration projects that end up being killed off by NIMBY-minded Members of Congress (although health reform could, we hope, tamp that down somewhat by giving more power to HHS to implement and build on successful test programs).  So even if ACO projects prove successful, they could face staunch opposition from lawmakers, not to mention providers and patients.  I've only pulled a few things out of the Devers/Berenson piece for this post.  The document itself is not long and worth your time.  A summary is here if you're on the go.