Accountable Care Organizations Versus Accountable Care: Is There a Difference?

Abstract

The notion of accountable health care is not new, although the measures of accountability have changed in the 13 years since I wrote the definition above. In addition to measuring quality, virtually all current notions of accountability incorporate cost components as well. Today, the real value of the care delivered is based on quality measured against an evidence base and that also incorporates patient safety and accounts for the patient experience of care, with contained costs. The Health Reform legislation is replete with references to value, quality, transparency, patient experience of care, efficiency, and effectiveness. Many of the mandatory Medicare initiatives for hospitals and physicians—as well as the many demonstrations and pilot programs that the law has spawned—were intended to address these new performance demands. In particular, hospitals are facing a new value-based purchasing mandate that will reduce Medicare payments overall but will reward specific hospitals that score well. Hospitals will be denied payment for hospital-acquired conditions and avoidable re-admissions. Physicians will also be subject to a value-based purchasing program applied to the Medicare Physician Fee Schedule. These are mandatory programs. 2 Against that background, it is fairly astonishing that what began as the concept of measuring hospital quality performance by aggregating data from the “extended medical staff” 3 morphed into the Medicare shared savings program available to accountable care organizations (ACOs) in the legislation. Even more astonishing has been the fervor with which the consultancy community has pushed the idea on health systems and physicians that they must become ACOs to survive. The relatively brief legislative provision, which has very little by way of detail, is not even a pilot or demonstration program. It is merely a voluntary opportunity. Further, now that the proposed regulations have been published, many of the organizations that spent large amounts of time and money preparing to become ACOs are questioning the viability of the proposition. Whether there will be any savings shared will be measured by the expenditures for beneficiaries assigned to the ACOs, which must accept and distribute payments from Parts A and B. This approach has no precedent, but the closest analogue is the Medicare Group Practice Demonstration. In that demonstration, after a similar 3-year obligation, only half the participants saw any bonus at all. 4 That very few of the more than 5700 hospitals and 780,000 physicians in America will be able to function as Medicare ACOs in the Health Reform legislation is becoming clear. The Centers for Medicare & Medicaid Services (CMS) projects that only 75 to 150 organizations in the country will be able to be ACOs. The capital requirements are high and the information technology necessary to manage financial risk is often lacking. The organizational infrastructures to govern such organizations do not exist in most quarters; and, above all, the change in clinical process design necessary to be able to eventually benefit financially from the Medicare model requires far greater sophistication than most health care systems currently demonstrate. Even the American Medical Group Association, whose