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ACO Payments May Hinge More on Geography than Quality

John Commins, for HealthLeaders Media, May 2, 2012

Location! Location! Location! When it comes to Accountable Care Organizations, the federal government is borrowing the adage from realtors that says it’s not so much the house as the neighborhood.

A study in the New England Journal of Medicine suggests that the shared-savings payments that participating providers receive in the Medicare Pioneer and Shared Savings ACO programs  might be more dependent upon geography than performance.

"There is a lot of variability in how favorable the payment methodology would be to organizations across the country because spending growth varies so much across different areas," J. Michael McWilliams, MD, a co-author of the study, tells HealthLeaders Media.

"Also we found it is likely these losses or gains would be unrelated to any organizational effort to improve quality of care and lower costs," says McWilliams, a general internist and assistant professor of healthcare policy and medicine at Harvard Medical School.

"It will probably even out over a few years for any given organizations but for half of them it will persist over time and it presents a pretty large gamble to perspective ACOs."

"If you happen to be in an area with high spending growth, your spending target will be well below that," he says. "And even if you do a good job, you might not quite get there. You might lose money or at the very least you might not get the shared savings that reflect your true performance relative to what spending would have been."

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1 comments on "ACO Payments May Hinge More on Geography than Quality"


Mike Barrett (5/3/2012 at 12:32 PM)
So, why does one area expense grows faster than another? Iowa doesn't seem to be fatal for seniors yet the costs there are very low compared to other locations... why? At some point this needs to be answered - if we don't already know what the answer is. And the difficult confrontations be made and resolved. ACOs begin the process of having providers meet, face to face, and explain why their practice patterns are different (for good or bad) from the admittedly ever evolving standard or best evidence of care. That medicine must move from an "art" to a science for the vast majority of care. Medicine should, if not must, expand their vision of the "M" in E&M codes to beyond the office visit. We tell a lawyer they have a fool for client if they advocate for themselves in their specialty. Yet, we expect the patient to advocate for themselves in the far less mature world of healthcare. We can and simply must do better for patients. ACO are most likely not the endpoint, rather an important next step in the evolution of the health care system.