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Could Health Plans Derail ACOs?

Jeff Elliott, for HealthLeaders Media, October 27, 2010

On paper, accountable care organizations (ACOs) and their promise of lower costs and improved quality appear to be just what this country's convoluted healthcare system needs. Realistically, there are many barriers to widespread execution, none of which are more formidable than ACA-weary health plans.

Perhaps it is comments like the one uttered during a New England Journal of Medicine-sponsored roundtable on ACOs by Dr. Lawrence Casalino, chief of the Division of Outcomes and Effectiveness Research and a professor at Weill Cornell Medical College, that have insurers a bit on edge:

"Actually, kind of the holy grail at the end of all this would be where an ACO is large enough and competent enough so payers would basically say, 'Here's the money. You take care of patients. You do it the best way that you know how. There's no utilization management. There's no prior authorization. There's no denying of fee-for-service claims. You just do it the best you can. And we'll be measuring quality and patient experience, to make sure you are not stinting on care.'"

In a perfect word, that would be the case. But the reality is that everyone will protect their own interests, which has health plans knocking on doors not only at the Centers for Medicare & Medicaid Services (CMS), but also at the Federal Trade Commission (FTC) and Department of Justice (DOJ), making sure they're aware that collaboration among already powerful healthcare providers under the ACO model also includes the risk collusion.

In a letter to CMS from America's Health Insurance Plans (AHIP) prior to a public workshop sponsored by the FTC, Office of Inspector General (OIG) and other federal agencies to discuss ACO legal issues, the association expressed its concern that ACOs could potentially be developed with the sole purpose of amassing market power.

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3 comments on "Could Health Plans Derail ACOs?"


J. Kuriyan (10/28/2010 at 9:58 AM)
ACOs are nothing more than the PHOs & IDSs of the 90's - an Avatar of a system that failed for many reasons. There are new lawyers and young Professors promoting the concept. We must be aware of the history or .... None of the reasons for failure have been corrected. Why should it succeed now? As for Direct contracting, except in some very closed communities dominated by one provider network, employers rejected the notion in no uncertain terms. Employees wanted the privilege to access any and all providers - and employers didn't see any reason for denying them. Meg Whitman-borrowed Gov. Schwarzenegger's definition of insanity applies here - "doing the same thing over & over, hoping the results will be different this time."

Mike D'Eramo (10/28/2010 at 8:27 AM)
The ACO does provide a means for the consumer to be reengaged into the health financing process. We have allowed the modern health plan to evolve into a non-value added third party that does not benefit patient, provider, or employer. However, the employer/patient dyad must ensure that providers are fully disclosing quality and cost data as part of their access process.

Kevin Lieb (10/27/2010 at 2:59 PM)
ACO's, if done right and as they mature, could eliminate the need for Health Insurance. The doctor is absolutely correct. In theory, you buy insurance to cover risk whether its for your car/home/or health. But if that risk is now pushed to the doctors, via capitation, why do you need an insurance company? They're just skimming off a percentage of revenue for little to no added value. If I ran an ACO and felt that I could take on risk I would go directly to the employers in my town/county and eliminate the middle man - insurance companies. Direct contracting makes much more sense that our healthcare insurance system.