Thursday, October 28, 2010

ACOs: Some Thoughts

I have blogged in the past about how ACOs might be a good answer to lowering health care costs and increasing quality at the same time. However there might be two factors that get in the way of this. First is that there are no penalties for missing quality targets. Given this, one could see how FFS payment would continue to be more appealing to providers. Second is that spending targets are calculated on past spending patterns so previous inefficiencies are "baked" into the calculations. Thus prospective ACOs even have an incentive to spend more before onset of the program to build up their historical spending base. Theoretically, a program that offers shared savings without any financial downside provides weak incentives for providers to change behavior.

And it looks like health insurance companies are concerned about being cut out of the picture (http://www.healthleadersmedia.com/page-2/HEP-258288/Could-Health-Plans-Derail-ACOs).
Key excerpt:

But the reality is that everyone will protect their own interests, which has health plans knocking on doors not only at the Centers for Medicare & Medicaid Services (CMS), but also at the Federal Trade Commission (FTC) and Department of Justice (DOJ), making sure they're aware that collaboration among already powerful healthcare providers under the ACO model also includes the risk collusion.

As I have said in the past, health plans owned by a provider group have the best chance of partnering to form an ACO.


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