Regulations for accountable care organizations are expected to be released by the end of the year and should address many questions that hospital executives and providers have about how they will function. Certain issues, including the four outlined below, should specifically be addressed by these regulations in order to ensure the long-term success of ACOs.
1. Cost competition vs. market control. According to Tom Williams, MBA, MPH, executive director, Integrated Healthcare Association, ACO-like provider organizations in California have been successful at controlling costs, but it's not a given. Recent information cited by Robert A. Berenson (1) found that consolidation by certain providers in California — which function similar to how ACOs are expected to function — could result in market power yielding higher unit prices.
As such, ACO regulations will need to ensure ACOs aren't created as excuses to gain market clout but rather to truly drive efficiency. According to an IHA white paper (2), ACOs can be the vehicle to align physicians and hospitals with health plans, which offer important opportunities for performance improvements across the entire continuum of care.
2. Issues of access vs. coordinated care. Another potential concern with ACOs involves how patients will be enrolled in them. Patients may or may not be made aware they are part of ACOs, and even if they are aware, there needs to be incentives for patients to stay within the ACO, where care can best be coordinated, says Mr. Williams.
"There is a potential conflict. On one hand we want the ACO to manage a population, but on the other we don't want the patient to feel restricted," says Mr. Williams. "In the past, when HMOs eased network restrictions [and allowed increased access to outside providers], costs went up. The promise of ACOs is that they coordinate care with greater quality and efficiency than open access PPO networks, and coordinated care leads to better patient outcomes at lower costs."
3. Variance in outcomes. ACO success may vary depending on certain characteristics of the population it manages. "From studying quality performance results, we found that, generally, physician groups in lower socioeconomic areas just don't perform as well as others," says Mr. Williams. "There are often fewer physicians in these areas, and they often don’t have the resources to invest in technologies to better coordinate care. The millions of Americans getting coverage [because of health reform], are going to be concentrated in these geographic areas. The question becomes — how do we help those groups perform successfully?"
4. Financial solvency of ACOs. California’s experience, described in the IHA white paper on ACOs in California, demonstrates the need to regulate the financial solvency of provider organizations that assume financial risk associated with an ACO. This oversight protects patients, providers and payors and ensures market stability.
Learn more about IHA.
Footnotes:
1. Unchecked Provider Clout In California Foreshadows Challenges To Health Reform. Berenson, Ginsburg, and Kemper. DOI: 10.1377/hlthaff.2009.0715. HEALTH AFFAIRS 29, NO. 4 (2010): 699–705.
2. Accountable Care Organizations in California: Lessons for the National Debate on Delivery System Reform. Integrated Healthcare Association white paper by Dolan and Robinson.
1. Cost competition vs. market control. According to Tom Williams, MBA, MPH, executive director, Integrated Healthcare Association, ACO-like provider organizations in California have been successful at controlling costs, but it's not a given. Recent information cited by Robert A. Berenson (1) found that consolidation by certain providers in California — which function similar to how ACOs are expected to function — could result in market power yielding higher unit prices.
As such, ACO regulations will need to ensure ACOs aren't created as excuses to gain market clout but rather to truly drive efficiency. According to an IHA white paper (2), ACOs can be the vehicle to align physicians and hospitals with health plans, which offer important opportunities for performance improvements across the entire continuum of care.
2. Issues of access vs. coordinated care. Another potential concern with ACOs involves how patients will be enrolled in them. Patients may or may not be made aware they are part of ACOs, and even if they are aware, there needs to be incentives for patients to stay within the ACO, where care can best be coordinated, says Mr. Williams.
"There is a potential conflict. On one hand we want the ACO to manage a population, but on the other we don't want the patient to feel restricted," says Mr. Williams. "In the past, when HMOs eased network restrictions [and allowed increased access to outside providers], costs went up. The promise of ACOs is that they coordinate care with greater quality and efficiency than open access PPO networks, and coordinated care leads to better patient outcomes at lower costs."
3. Variance in outcomes. ACO success may vary depending on certain characteristics of the population it manages. "From studying quality performance results, we found that, generally, physician groups in lower socioeconomic areas just don't perform as well as others," says Mr. Williams. "There are often fewer physicians in these areas, and they often don’t have the resources to invest in technologies to better coordinate care. The millions of Americans getting coverage [because of health reform], are going to be concentrated in these geographic areas. The question becomes — how do we help those groups perform successfully?"
4. Financial solvency of ACOs. California’s experience, described in the IHA white paper on ACOs in California, demonstrates the need to regulate the financial solvency of provider organizations that assume financial risk associated with an ACO. This oversight protects patients, providers and payors and ensures market stability.
Learn more about IHA.
Footnotes:
1. Unchecked Provider Clout In California Foreshadows Challenges To Health Reform. Berenson, Ginsburg, and Kemper. DOI: 10.1377/hlthaff.2009.0715. HEALTH AFFAIRS 29, NO. 4 (2010): 699–705.
2. Accountable Care Organizations in California: Lessons for the National Debate on Delivery System Reform. Integrated Healthcare Association white paper by Dolan and Robinson.