Accountable Care Organizations: A Health Experiment in Progress

Husband and wife research team Dr. Margaret Pericak-Vance, Ph.D (R), director of the Hussman Institute for Human Genomics, University of Miami, and Jeffery M. Vance, M.D., Ph.D, chair of department of Human Genetics, University of Miami, are seen with a tray of DNA samples taken from the BioRepository in the genetics lab where they did research that discovered the cause of retinitis pigmentosa, a form of blindness, on February 2, 2011 in Miami, Florida. The ground breaking discovery that was announced today, February 3, 2011 has helped Betti and Carlos Lidsky's nearly 20-year search for what caused three of their four children to lose their sight. Researchers used a new technology known as whole exome sequencing to find the cause and now hope with the new information to be able to work on a possible cure for the eye disease.
National Journal
Darius Tahir
Add to Briefcase
Darius Tahir
Oct. 10, 2013, 8:53 a.m.

A pa­tient goes to the doc­tor’s of­fice with vague back pain. He gets the most ex­pens­ive scan on the mar­ket, which sug­gests sur­gery might be needed. Bet­ter be safe than sorry; he has the sur­gery. But a closer look would have re­vealed that cheap­er phys­ic­al ther­apy would have been just as ef­fect­ive.

The dol­lars wasted on that pa­tient con­trib­ute to a key prob­lem with the health care sys­tem: soar­ing costs that haven’t been ac­com­pan­ied by a com­men­sur­ate in­crease in qual­ity. Obama­care is try­ing to fix the prob­lem of ex­pens­ive, un­ne­ces­sary care in sev­er­al ways, the most well-known of which are ac­count­able care or­gan­iz­a­tions.

ACOs are groups of pro­viders that have been as­signed a pro­jec­ted budget per pa­tient. If the cost of caring for the pa­tient comes in be­low that level, the group shares the sav­ings. The idea is that doc­tors will bet­ter co­ordin­ate care to pre­vent waste­ful or in­ef­fect­ive treat­ment. Pi­lot pro­grams sug­gest the jury is still out on ACOs’ abil­ity to drive this kind of be­ha­vi­or.

A re­cent work­ing pa­per by M. Mar­it Ra­havi, an eco­nom­ist at the Uni­versity of Brit­ish Columbia, il­lus­trates the prob­lem with cur­rent be­ha­vi­or. Ra­havi ex­am­ines births by Cali­for­ni­an and Tex­an first-time moth­ers who are phys­i­cians and com­pares them to first-time col­lege-edu­cated moth­ers. Due to their med­ic­al edu­ca­tion, phys­i­cians would pre­sum­ably be bet­ter equipped to avoid un­ne­ces­sary med­ic­al pro­ced­ures. And, in­deed, phys­i­cian-moth­ers have lower rates of cesarean sec­tions and high­er rates of va­gin­al de­liv­er­ies than their col­lege-edu­cated coun­ter­parts. The phys­i­cian-moth­ers and their ba­bies ten­ded to be health­i­er, too.

Be­cause they’re more ex­pens­ive, C-sec­tions are more prof­it­able for doc­tors and hos­pit­als. Nearly 3 per­cent less was spent on phys­i­cian-moth­ers than oth­er moth­ers in the same hos­pit­al. A Los Angeles hos­pit­al ex­ec­ut­ive quoted in the pa­per ad­mits that in­cent­ives to re­duce C-sec­tions are low, des­pite their prob­able over­use.

Re­du­cing the num­ber of un­ne­ces­sary med­ic­al pro­ced­ures means chan­ging pay­ment in­cent­ives, re­formers ar­gue. With ac­count­able care or­gan­iz­a­tions, the the­ory is that if the pro­vider does a good job tak­ing care of the pa­tient, something the in­surer can track with qual­ity met­rics, the pa­tient’s health will be bet­ter, they will use few­er and less ex­pens­ive ser­vices, and, there­fore, they will cost less to in­sure.

Medi­care is run­ning two pi­lot ver­sions of the pro­gram. In one, pro­viders may sus­tain losses if they’re over budget but can be hand­somely re­war­ded if they’re un­der. The oth­er re­wards pro­viders for com­ing in un­der budget but has no down­side risk. If they work, the pro­grams will be ex­pan­ded.

Early res­ults are mixed. Of the 32 ini­tial pro­viders in the high­er-risk, high­er-re­ward Medi­care ACO pro­gram, 18 de­livered sav­ings. Of the 14 that didn’t, two dropped out of the pro­gram en­tirely, and sev­er­al op­ted to move in­to the less-risky ACO pi­lot pro­gram, ac­cord­ing to an ana­lys­is by in­vest­ment bank Triple Tree. Their de­par­ture from the pro­gram was pres­aged by pro­vider com­plaints over the ex­tens­ive qual­ity meas­ure­ments re­quired by Medi­care; the gov­ern­ment is mon­it­or­ing qual­ity to make sure pro­viders aren’t skip­ping ne­ces­sary treat­ment to come in un­der budget.

While Medi­care is test­ing ACOs, private en­ter­prise is build­ing them ag­gress­ively. Even one of the gov­ern­ment-pro­gram dro­pouts, the New Mex­ico hos­pit­al sys­tem called Pres­by­teri­an Health­care Ser­vices, has partnered with tech gi­ant In­tel to run an ACO-like or­gan­iz­a­tion for the firm’s loc­al em­ploy­ees, sug­gest­ing its prob­lem with the Medi­care pi­lot was the prac­tice, not the the­ory. Private in­surers, in­clud­ing Cigna and Aet­na, are also jump­ing on board, and Triple Tree’s ana­lys­is shows well over 100 pay­er-backed ACOs.

Some ini­tial res­ults have ar­rived from these private pro­grams. A study pub­lished in the Journ­al of the Amer­ic­an Med­ic­al As­so­ci­ation looked at 11 pro­vider or­gan­iz­a­tions that entered Blue Cross Blue Shield’s ACO-like or­gan­iz­a­tion for Medi­care be­ne­fi­ciar­ies in Mas­sachu­setts between 2007 and 2010. Some of the news was good: Even the Medi­care pa­tients who wer­en’t in an ACO cost 3 per­cent less than a con­trol group dur­ing this time, sug­gest­ing in­sti­tu­tion­al changes that spread sav­ings to all pa­tients. Some wasn’t as good: Just one of the four qual­ity meas­ures tested by the au­thors im­proved for the non-ACO Medi­care pop­u­la­tion.

Mak­ing ACOs work will re­quire many or­gan­iz­a­tion­al changes on the part of pro­viders. They’ll have to ori­ent their sys­tems more around qual­ity than quant­ity. They’ll have to track pa­tients closely, us­ing new ana­lyt­ics, to make sure their status is im­prov­ing. And they may fo­cus on high-risk, high-cost pa­tients, us­ing ana­lyt­ics and tailored in­ter­ven­tions to help them. The pay­off for im­prov­ing the health of that pop­u­la­tion could be sub­stan­tial.

Crit­ics worry these changes could en­cour­age ex­cess­ive pro­vider con­cen­tra­tion in the private sec­tor. Hos­pit­al mer­gers and ver­tic­al in­teg­ra­tion may ac­cel­er­ate if ACOs are widely ad­op­ted be­cause they en­cour­age closer co­ordin­a­tion among health-sys­tem play­ers. The shift could counter the ef­fect of the ACOs and ac­tu­ally drive up prices. Aus­tin Frakt, a Bo­ston Uni­versity health eco­nom­ist, writes, “I un­der­stand why Medi­care is pro­mot­ing ACOs. But, be­cause they en­cour­age pro­vider in­teg­ra­tion, which could lead to high­er prices and premi­ums, I do not un­der­stand why private in­surers would be.” The Fed­er­al Trade Com­mis­sion shared that con­cern when Medi­care first began its pi­lots, and tight­er rules to dis­cour­age this be­ha­vi­or were put in place. But private in­surers, which gen­er­ally con­trol smal­ler por­tions of the mar­ket than Medi­care, re­main vul­ner­able to the neg­at­ive ef­fects of con­sol­id­a­tion.

The ACO ex­per­i­ment is in mo­tion, and we’ll have to see what hap­pens when it stops. Early res­ults sug­gest suc­cess is not as­sured.

What We're Following See More »
WHO PLAYED THE DONALD?
Longtime Clinton Aide Played Trump in Mock Debates
5 minutes ago
THE DETAILS

After keeping the information private for most of the lead-up to the debate on Monday, it has been revealed that longtime Clinton aide Philippe Reines has been playing the role of Donald Trump in her debate prep. Reines knows Clinton better than most, able to identify both her strengths and weaknesses, and his selection for a sparring partner shows that Clinton is preparing for the brash and confrontational Donald Trump many have come to expect.

Source:
WEEKEND POLLING ROUNDUP
New Polls Still Show Razor-Thin Margins
11 minutes ago
THE LATEST
  • A national Washington Post/ABC News poll shows Clinton leading Trump by just two points among likely voters, 46% to 44%.
  • A national Bloomberg poll out Monday morning by Selzer & Co. has Clinton and Trump tied at 46% in a two-way race, and Trump ahead 43% to 41% in a four-way race.
  • A CNN/ORC poll in Colorado shows likely voters’ support for Trump at 42%, 41% for Clinton, and a CNN/ORC poll in Pennsylvania has Clinton at 45% and Trump at 44%.
  • A Portland Press Herald/UNH survey in Maine has Clinton leading Trump in ME-01 and Trump ahead in ME-02.
THE QUESTION
How Many Times Has the Trump Campaign Emailed Ted Cruz’s Supporters?
17 minutes ago
THE ANSWER

More than 30 times, in the case of some donors. Long before Cruz endorsed Trump—and before he even snubbed the nominee at the Republican National Convention—"the senator quietly began renting his vast donor email file to his former rival, pocketing at least tens of thousands of dollars, and more likely hundreds of thousands, that can be used to bankroll the Texan’s own political future."

Source:
STAKES ARE HIGH
Debate Could Sway One-Third of Voters
12 hours ago
THE LATEST

"A new Wall Street Journal/NBC News poll found that 34% of registered voters think the three presidential debates would be extremely or quite important in helping them decide whom to support for president. About 11% of voters are considered 'debate persuadables'—that is, they think the debates are important and are either third-party voters or only loosely committed to either major-party candidate."

Source:
YOU DON’T BRING ME FLOWERS ANYMORE
Gennifer Flowers May Not Appear After All
12 hours ago
THE LATEST

Will he or won't he? That's the question surrounding Donald Trump and his on-again, off-again threats to bring onetime Bill Clinton paramour Gennifer Flowers to the debate as his guest. An assistant to flowers initially said she'd be there, but Trump campaign chief Kellyanne Conway "said on ABC’s 'This Week' that the Trump campaign had not invited Flowers to the debate, but she didn’t rule out the possibility of Flowers being in the audience."

Source:
×