Vol. 65 April 15, 2012 First ACOs Appear with a Whimper, Not a Bang.

Medicare just released the names of the first Accountable Care Organizations (ACO), a major innovation of the Affordable Care Act (ObamaCare). ACOs apply to and are approved by the federal government as participants in the Medicare Shared Savings Program :

“All ACOs that succeed in providing high quality care – as measured by performance on 33 quality measures relating to care coordination and patient safety, use of appropriate preventive health services, improved care for at-risk populations, and the patient experience of care – while reducing the costs of care – may share in the savings to Medicare.”


 In the world of health care providers there has been much consternation, gnashing of teeth (maybe other body parts too), and exuberant, expert speculations about what an ACO was going to look like and by what means  the ACO program was going to “revolutionize American medicine” as promised by Washington.


 The first 27 ACO’s are surprisingly underwhelming. None of them have been developed by the “big boys” with name recognition in the medical marketplace, unless you happen to live in Caldwell County, North Carolina, coastal Georgia, or Hackensack NJ . Half are small physician-led organizations. Less than half appear to involve hospitals. All totaled they cover less than 1% of Medicare patients. Only two of the twenty-seven are willing to take limited risk of losing money (“going over budget”) in return for the potential of sharing in more savings (“providing care under budget”).

Medicare beneficiaries (patients) will continue to be able to see ANY provider and unless the provider boasts about it or otherwise publicize it, the patient may not know that his or her physician is a member of an ACO. In my local community the physicians organization took out a full-page ad in Sunday’s paper to “congratulate” themselves on being selected as an ACO. This particular physicians organization has had a contentious business relationship with the local hospitals for ten years, plans to cover only the minimum of 5,000 Medicare patients, and finds itself in competition with a recently spawned physician-hospital organization.

Another physicians organization formed just this year in a neighboring county plans to cover 6000 Medicare patients and does not involve its community hospital. The hospital itself is in a fierce, cost-cutting competition with a larger hospital up the road  just 15 miles closer to the academic medical centers who are courting it for a merger.

Both situations illustrate how complicated the medical/political/economic environment is for these initial ACOs.

Is this meager initial blossoming of ACOs due to bureaucratic complexity and uncertainty,

(“In conjunction with the final rule, the Department of Health and Human Services Office of Inspector General, the Department of Justice, the Federal Trade Commission, and the Internal Revenue Service issued separate notices addressing a variety of legal issues as they applied to the Shared Savings Program.  These included the interaction of the Shared Savings Program with the federal anti-kickback, physician self-referral, civil monetary penalty (the fraud and abuse laws) and antitrust laws, as well as the Internal Revenue Code regarding the tax implications for nonprofit entities seeking to participate in ACOs.  The final rule, the notice of the Advance Payment ACO Model, and the regulatory guidance on fraud and abuse were published in the Nov. 2, 2011 Federal Register.”)

 OR does it herald the appearance of an actual “new model of lean and mean care organization led by entrepreneurial physicians”,

 OR is it just one more step in our historically incremental evolution towards a system of universal health care?

Maybe the next 150 ACOs to be announced in July 2012 will give us more of a clue.

Stay tuned.

One Response to Vol. 65 April 15, 2012 First ACOs Appear with a Whimper, Not a Bang.

  1. […] to work with, and even protect themselves from, the wolves (health insurance companies)? The first 27 ACOs designated by the federal government have been mostly physician-run, only a third of them even […]

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