Are ACOs a Retread of HMOs?

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ACO-thumb9Veterans of the healthcare industry are experiencing déjà vu when it comes to accountable care organizations, writes Greg Freeman in the December 2013 edition of Managed Care Contracting and Reimbursement Advisor, a newsletter from HealthLeaders Media.

In fact, Richard Amerling, MD, associate director of clinical medicine at Albert Einstein College of Medicine in New York City, director of outpatient dialysis at Beth Israel Medical Center, and a director of the Association of American Physicians and Surgeons, goes so far as to call ACOs “just the latest fad.”

He points out that ACOs and HMOs are born of the same intent, with changes that “are purely cosmetic.”

According to Amerling, “[ACOs are] fundamentally not very different from the HMO model. There are a few bells and whistles, but otherwise it’s the same old incentive to do as little as possible and find the healthiest patients you can.”

Freeman elaborates: “Amerling says his concerns are borne out by the experience of the Pioneer ACOs that recently reported their results. All of the 32 health systems in the Pioneer ACO program reported improved scores on quality measures such as cancer screenings and controlling blood pressure, but only 18 were able to lower costs for the Medicare patients they treated. Two hospitals reported losing money on the ACO program, and seven notified CMS that they will switch to a different ACO because of the monetary strain. Two said they will dump the ACO model and find another approach with less financial risk.”

Amerling believes even providers and insurers who are able to launch a workable ACO system will eventually abandon it because of these “financial pressures.”

“Companies are going to jump on board and hope to make money as long as they can, but ultimately things start to play against you. The fact that in the demonstration project several of the providers who tried it lost money, that is a warning sign. When you try to apply this generally it’s going to be a money loser.”

Amerling is a strong proponent of the fee-for-service model, because he believes it is this model that is best suited to meet the needs of critically ill patients. “When I have a patient with unstable angina, I can get them cath-ed the same day. When that mechanism is not available in an ACO, we’re going to be delivering late and untimely care, which is inevitably worse and more expensive… [ACOs are] going to give a bundled payment to cover everything, creating a huge incentive to get only healthy people. When that cuts costs for that type of treatment, the government will say it only makes sense to lower the reimbursement.”

He worries about the impact this will have on the quality of work done by physicians: “They are essentially going to be salaried in a lot of these organizations, and they will have the incentive to do the minimum rather than the maximum. There’s nothing in it for them to go the extra mile. They are going to be squeezed by the administrative staff at these ACOs, and there are going to be a lot of administrators necessary to run these things.”

As healthcare executives, do you agree with Amerling’s concerns? Are ACOs just a reboot of HMOs? Will you ultimately have to abandon the model because of its financial impact on your organization?

-by Pete Fernbaugh

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