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  • Obamacare at 3 Years: Unrealistic Expectations for ACOs


    Accountable Care Organizations (ACOs)—a concept that a group of doctors and hospitals will work collectively to manage the care and costs of Medicare patients—were expected to transform the delivery of health care. Yet again, much like the rest of Obamacare, these promises appear to be falling short of expectations.

    In writing for Heritage, founding member of the Galen Institute John Hoff explains:

    ACOs, as described, are a strange hybrid of fee-for-service and managed care, subject to ongoing control by CMS [Centers for Medicare and Medicaid Services]. Like other hybrids, they are not likely to breed naturally. ACOs are a keystone of the PPACA [Patient Protection and Affordable Care Act], but they are unlikely to improve health care and reduce its costs. ACOs are further demonstration, if any is needed, that the PPACA is ill-conceived. CMS-directed change will not bring meaningful reform, but impede it.

    Thus far, the experience of the first group of ACOs, the 32 “Pioneers” (as the government calls them), has been shaky, and some have suggested they might even drop out of the program.

    In the first year of operation, ACOs are only required to report their quality outcomes in order to receive a shared-savings payment; and in the second year, their payment is tied to performance—actually meeting the quality metrics. The Pioneers are scheduled to move this year from pay-for-reporting to pay-for-performance—but they don’t think they’re ready. A majority of them sent a letter to the CMS asking to delay it a year, keeping them as “reporting-only status” for performance year 2013.

    As Hoff concludes:

    CMS’s effort, launched by Obamacare, to use the leverage of Medicare reimbursement to impose and control a favored model of health care delivery is bound to fail, but only after increasing the angst of providers and patients and dissipating large amounts of resources—money, time, and brainpower. It blocks the development of other ideas for reforming health care delivery.

    Even if ACOs somehow result in cost savings, the Congressional Budget Office estimates that it would only be $4.9 billion over 10 years (2010–2019). Savings at this level are practically a rounding error for a Medicare program that will be spending over a trillion dollars a year by 2022.

    Clayton Christensen, professor of business administration at Harvard Business School; Dr. Jeffrey Flier, dean of the faculty of medicine at Harvard University; and Vineeta Vijayaraghavan, senior research fellow at Innosight Institute warn, “The ACO concept is based on assumptions about personal and economic behavior—by doctors, patients and others—that aren’t realistic.”

    ACOs will likely be another example of Obamacare promising more than it actually delivers.

    Posted in Obamacare [slideshow_deploy]

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