MedPAC Toys with Asking ACOs to Assume Some Risk
By Kerry Young
The Commonwealth Fund, November 7, 2013
Medicare may need to ask accountable care organizations (ACOs) to accept some financial risk as part of a larger effort to make health care both more effective and less expensive, members of the Medicare Payment Advisory Commission (MedPAC) recently said.
While not making an official recommendation, many MedPAC members said that they favored increased use of a two-sided approach for accountable care organizations, meaning that they enter arrangements in which they would share in both potentials savings and losses. The alternative is a one-sided arrangement, with no potential for shared losses for the ACOs.
“Ultimately, these ACOs need to be accountable for delivering on outcomes including cost lower than fee-for-service,” which is Medicare’s more traditional payment model, said MedPAC member Scott Armstrong of Group Health Cooperative in Seattle.
Several MedPAC members said that medical practices and hospitals would need time to adjust to the notion of risk-sharing, and should be allowed some time to operate under agreements that only shared savings to adjust to this new model.
MedPAC members also stressed the need for ACOs to build greater ties with the people whose medical outcomes will determine the success of cost-sharing models.
“How in the world can a group be accountable for care for a population of patients that they don’t have a relationship with?” asked MedPAC Commissioner Armstrong.
MedPAC Chairman Glenn M. Hackbarth said that policymakers will need to keep in mind what payment alternatives remain for medical practices and hospitals in designing any changes for ACOs.
The old traditional Medicare fee-for-service model encourages “a volume-focused business,” he said.
“For a voluntary ACO, you have got to make the terms really delicious” to compete widely against the model, he said.
But, the success of the ACO program may not rest on how common they become, he said. The ACO programs may be most attractive to physician groups, and less so to hospital groups and larger university health programs, he added.
“If all of the academic medical centers are out, if there are no hospital based ACOs, if they are all sponsored by physician organizations, is that necessarily a bad thing?” Hackbarth said. “I could imagine that, in fact, that may be ultimately the most sustainable model on an ACO, and trying to jimmy the rules so that it attractive to academic medical centers may compromise your design.”
http://www.commonwealthfund.org/Newsletters/Washington-Health-Policy-in-Review/2013/Nov/November-11-2013/MedPAC-Toys-With-Asking-ACOs-to-Assume-Some-Risk.aspx?omnicid=16
Comment:
By Don McCanne, M.D. MedPAC, the Medicare Payment Advisory Commission, has the important function of providing to Congress and CMS advice regarding Medicare payments. Since MedPAC is where the action is, it is helpful to understand the committee membersā views on what has been touted as the most important provision of the Affordable Care Act that would provide greater efficiency and lower costs in health care – the accountable care organizations (ACOs). Based on the membersā comments, it is not difficult to see why others are having difficulties designing ACOs. Although they suggest that the ACOs should bear some financial risk for the services provided, they express caution in making the transition since physicians are apt to prefer the current fee-for-service model – a model that ACO advocates wish to replace – over a model that is designed to reduce spending partly by placing physicians at financial risk. Why would a physician who is being paid for all of the services being provided want to replace that with a model that extracts financial penalties for providing that same level of care? Also it is somewhat insulting to the physicians who believe that are trying to provide optimal care to be accused of pushing extra services purely for the money (likely some do, but my personal observation is that such behavior is uncommon). ACOs are also a bizarre model of coordinated care since the participating providers are selected by the providers themselves and not by the patient. It is difficult to see how the ACOs could be fully accountable for the patientsā care when the patients are not bound to the ACOs. How can you make the physicians responsible for the spending when the patient is referred for a $400 imaging study within the ACO, but the patient decides to get a $2000 study outside of the ACO? MedPAC Chairman Glenn Hackbarth even suggests that academic medical centers and other hospitals should be left out of the ACOs, leaving them to physician organizations. When the ACOs are supposed to achieve success by bundling services for a given clinical circumstance, such as heart valve replacement or a kidney transplant, how do you leave the hospital out of the bundled package? And do we really want academic medical centers to be excluded from the financing model? Of course, the insurers have been very interested in taking over the management of the ACOs, but their concept is not much different from their old managed care models in which the patients are made captive through the insurance plans they have – a model that angered patients and physicians alike. It is fine to look for efficiencies and quality improvement in health care delivery, but we should not let the ACO craze distract us from advocacy for a model that we already know improves quality and contains costs – a single payer national health program.
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