Accountable Care Organizations: Potential Pitfalls

cautionLast week, we looked at the basics of accountable care organizations, the Medicare pilot program established by the Patient Protection and Affordable Care Act (PPACA) to rein in the growth of spending. (If you’re not yet up to speed on ACO basics, click here.)

The Centers for Medicare and Medicaid Services (CMS) hasn’t yet issued exact rules and guidelines for Accountable Care Organizations (ACO), so there are still uncertainties about how they’ll operate. That hasn’t stopped critics from raising concerns about their potential pitfalls.

We want all nurses to be aware of these objections and criticisms so they can participate in the emerging discussion. And we firmly believe that being informed about current health care issues and trends is a crucial step toward developing the nursing leadership skills that will be needed as our health care system evolves in the years ahead.

Potential financial and legal pitfalls

At this point, the main purpose of ACOs is to rein in the growth rate of Medicare spending. Yet strangely enough, some critics worry that ACOs might drive some health care costs higher. When former competitors become collaborators, they can acquire the market clout of a monopoly. It may be tempting for them to offset a loss of Medicare revenue by charging higher prices to private insurers and self-pay patients.

This in turn gives rise to certain legal concerns. The consolidation that will take place as hospitals and doctors rush to form ACOs means they could run afoul of existing anti-trust laws, which are designed to limit the market power of monopolies and ensure a fair amount of competition.

The Federal Trade Commission and the Justice Department, the two entities that enforce anti-trust laws, are currently working to clarify how the laws will apply to health care as reforms kick in.

Comparisons to managed care

It has also been pointed out that ACOs look a bit like health maintenance organizations. HMOs sought to control costs by limiting patient choices, resulting in a consumer backlash during the 1990s. They are generally regarded as a failure.

The idea here, with the ACO model, would be to replicate some of the success that HMOs had in holding down costs, while avoiding the structural features that limited patient choice and kept patients locked into a network.

In many cases, providers working for HMOs had an incentive to keep costs down by denying appropriate levels of care. ACOs hope to overcome this problem by bringing in the idea of accountable care – to receive bonus payments for their cost savings, providers will also have to meet certain quality benchmarks. Of course, this comes with a new set of problems, like defining quality standards and deciding how they will be assessed.

Perhaps most importantly, ACOs will not seek to keep patients within a defined network, or charge them different rates for obtaining care from providers belonging to a different ACO. In fact, many Medicare patients may not even realize they have been assigned to an ACO. A health policy brief from the Robert Wood Johnson Foundation describes the concept of “invisible enrollment” like this:

Patients who receive most of their care from ACO-affiliated providers would be treated as “assigned” to the ACO. At least at the outset, they would not be formally enrolled, would not be required to obtain services through the ACO, and might not even know the ACO existed. The assignment process would allow payers to define a population for which the ACO could be held accountable. Critics of this approach believe that patients should have a choice about participating in an arrangement that could reward providers for reducing services.

What’s next for accountable care?

Whether ACOs are a panacea for our ailing health care system or the next expensive failure remains to be seen. But here’s one prediction that many experts are making: as the demand for accountability and cost containment grows within our health care system, the role of the nurse case manager will expand in importance.

In one of our next posts, we’ll cover how nursing case management can help new models of care to meet their mandate for accountability.