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ACO Hurdles, Risks, Could Dampen Provider Enthusiasm

John Commins, for HealthLeaders Media, May 11, 2011

Isgur identified several "huge barriers" for many fledgling ACOs. In addition to not knowing who their beneficiaries are until after the first year, ACOs also are not closed networks, and beneficiaries are free to seek treatment wherever they'd like. When beneficiaries get care out of network, that accrued cost is assigned to the ACO, even though they didn't provide the care, and probably had no say in the decision making. "You wake up one morning and a significant portion of your population is in Florida for the winter," he says. "When you are dealing with a Medicare population, especially in the upper incomes, you are dealing with a retiree population that may be living in more than one geographic place in one year."

Finally, Isgur says, demonstration projects have shown that Medicare beneficiary populations have significant "churn" -- about 25% turnover each year, further straining an ACO's ability to control costs. 

Isgur says he would not be surprised to see "substantial changes" to the final ACO rules after the comment period ends on June 6. "Most people looking at these draft rules believe there are going to be at least some attempt to alleviate some of the burden," he says. "To be frank, there is negativity in the market place. When these were released, there were 500 pages of rules a lot of organizations threw up their hands and said 'we aren't ready to tackle this.' The government is going to have to revisit these and we can expect to see some change."

Because the federal government is pushing patient choice, Isgur says any change in the rules to help ACOs would more likely involve "a more prospective understanding of the beneficiary population so you can have more accuracy in beginning to manage that population off the bat." That could include some contingencies for ACOs whose patients get a certain percentage of care from outside the service area, perhaps not accruing those costs toward the ACOs average costs.

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