The ACO Prescription?

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Accountable Care Organizations are the ACA’s [Obamacare] answer to skyrocketing Medicare costs, but who wins besides the government? Doctors take on the financial risk, and patients could suffer as a result.

Here’s a look at how Accountable Care Organizations could affect the quality of healthcare in the near future. Brought to you by


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11 Responses

  1. First Impressions of the Medicare ACO Rule4 Responses

    On March 31, 2011 – CMS released the long-awaited “Medicare Shared Savings Program: Accountable Care Organizations” document (ACO Rule).

    Read the details here (strong suggestion: unless you’re working on your PhD in ACOs, start with the fact sheets).



  2. Healthcare Organizations Balk at ACO Rules

    Most major US clinics are balking at the rules proposed for Accountable Care Organizations. Medicare officials have listened to the complaints, but the agency must balance the needs of patients as well as clinics, said Dr. Don Berwick, administrator of the Centers for Medicare & Medicaid Services.

    Currently, the government and insurers largely pay hospitals and doctors for each patient visit or procedure. But supporters of the healthcare overhaul say that kind of payment system drives up the nation’s healthcare costs by giving providers incentive to perform more tests and procedures than may be necessary.

    ACOs would give health centers a powerful financial incentive to improve care and reduce costs. Payments to hospitals would be given in lump sums for group of patients, such as for those with heart disease, for example. Should a patient’s health improve and not require a great deal of expensive care, the clinic would keep the savings. Should a patient require more care, doctors and clinics are on the hook for any excess cost. Many health systems embraced the idea. But when the federal government proposed more than 400 pages of regulations, the clinics best in a position to form ACOs objected.

    Source: Elizabeth Stawicki, Minnesota Public Radio [8/19/11


  3. CMS Asks Providers to Test Bundled Payments

    The CMS expects “hundreds” of providers to “help test and develop” four versions of bundled payments.

    The bundled payments initiative, authorized by the Patient Protection and Affordable Care Act, aims to encourage clinicians and hospitals to coordinate care, improve the quality of care, and save money for Medicare, according to descriptions posted on the CMS website.

    Many providers are expected to apply to participate in the voluntary initiative, despite the risk of losing Medicare funding if spending goals are not met because they also may qualify for additional funding.

    Source: Rich Daly, Modern Healthcare [8/23/11]


  4. Medicare Unveils Bundled Payment Models to Start in 2012

    Physicians and hospitals will be collaborating to bid on providing high-quality, low-cost inpatient and post-discharge care to Medicare patients under a new payment option starting in 2012, the Centers for Medicare & Medicaid Services said. Hundreds of interested hospitals and groups of physicians are expected to coordinate patient care under the new bundled payment initiative. Bundling payments is one of several models that physicians in organized medicine have encouraged the Medicare agency to use in place of traditional fee for service.

    Under the initiative, created by the health system reform law, physicians and hospitals would come up with a plan and submit a bid to participate. Two of the bundled payment models focus on inpatient stays, a third involves post-discharge services only, and a fourth combines inpatient and post-discharge services.

    Source: Charles Fiegl, AM News [9/5/11]


  5. Beware the ACOs?

    Jerome, Charles and Rich – Adding to a continuing drumbeat of skepticism about Accountable Care Organizations (ACOs), Gail Wilenksy PhD just offered a “sobering” Perspective in the New England Journal of Medicine about their underlying business model.

    She draws on the lessons of the “Physician Group Practice Demonstration”, where – despite “glowing” press releases – the financial savings were decidedly elusive.

    And so, does ACO really mean “Another Costly Organization“?

    Dr. David Edward Marcinko FACFAS, MBA CMP™


  6. CMS launching ACO database with identifiable participant info
    [When Protected Health information is not so “Protected”]

    The Centers for Medicare & Medicaid Services (CMS) will launch a new accountable care organization (ACO) records database that will house personally identifiable information about participants in the Shared Savings Program and Pioneer ACO Program, according to a CMS announcement.

    The information will include Medicare beneficiaries, healthcare sole proprietors, ACO leaders and managers, and other ACO-related persons and span data, such as names, gender, Social Security numbers, birthdays, addresses, health insurance claim numbers, and types of services, among other information.

    As an HIT guy, why I am not surprised?



  7. ACOs – My Opinion

    Being an optimist, I think ACOs hold a bit of theoretical promise. But, if patients are able to seek care outside of the ACO structure, the risk on medical providers will increase just as their ability to contain costs will decrease. Thus, they may fail under this format.

    Dr. David Edward Marcinko MBA, CMP™


  8. HRSA – Doc Database Removal a ‘Temporary Action’

    Ralph – The government agency that removed from public view a national database that chronicles physicians’ malpractice fines and sanctions declined to provide a time frame for restoring public access to the database.

    The U.S. Health Resources and Services Administration’s National Practitioner Data Bank didn’t list physicians’ names, but agency officials removed the database’s Public Use File in response to concern that reporters and other members of the public could use other data sources in combination with their information to confirm the identity of doctors.

    Source: Ashok Selvam, Modern Physician [9/22/11]


  9. Show me [not the docs] the money!

    Furthermore, one wonders if those increased payments will go to the docs? Duh – more like the administrators who manage the ACO.

    Anonymous Healthcare Consultant


  10. Mike Dukakis Trashes ACOs

    Dr. Marcinko – It seems that at least one pundit agrees with you.



  11. A combination of a challenging economy and a new legal environment make streamlining health plan administrative costs a high priority. Weak employment puts pressure on both prices and membership. The weak credit environment heightens plan sponsor interest in self-insurance, which directly increases the visibility of administrative expenses. The growth of Medicaid, in the midst of state budget deficits, leads to price pressures in that sector as well.

    The Accountable Care Act has multiplied these challenges.

    For example, Commercial and Medicare plan premium rate reviews put pressure on and regulate prices, respectively. At the same time, MLR rules place floors under health care costs, the declared purpose of which are to “create incentives for” health plans “to become more efficient” in the execution of their administrative activities. Even if the Supreme Court or a future Administration and Congress changes the legal framework, administrative cost optimization is now a permanent part of the warp and woof of the health plan industry.

    Douglas B. Sherlock, CFA
    Senior Health Care Analyst


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