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Are ACOs Really Different from HMOs?

Greg Freeman, November 27, 2013

"Utilization review was developed, implemented, and controlled by the insurance companies," Damore says. "In the accountable care model, it's driven by the providers. There are no preapproval processes. The providers are developing their own appropriateness criteria."

Almost all the ACOs currently in operation have only upside risk for the physician, he says, contrary to the HMO model that tried to shift much of the risk to the physician. The ACO model also includes 33 quality measures that determine pay rates, which Damore says is quite different than when HMOs talked a lot about quality but did little to measure it.

"In the HMO days they did not tie quality to our dollars," Damore says. "ACOs are built around that idea, and that is a fundamental difference."

Comparing HMOs and ACOs is difficult because there are different types of ACOs, notes Greg ­Chittim, director of analytics and performance improvement at Arcadia Solutions, a consulting company based in Burlington, Mass., that works with ACOs. Pioneer, shared savings, and commercial ACOs all vary in their structure, so comparing them to the historical experience with HMOs can be misleading, he says.

"Whereas one type of ACO might be very different from others and not at all like an ACO, you could say that some are more like an HMO," Chittim says. "It is still to be seen how accountable care will affect providers and patients alike."

But he points out that the designers of the ACOs are well aware of how the HMO experience ended and are intent on not repeating the same errors.

"They have put in very deliberate contractual measures to prohibit structurally the kind of rationing and denial of care that became apparent in the HMO years," Chittim says. "There are quality measures intended to make sure that while you're saving money you are not doing it at the expense of individual patients or any patient population."

Spending down but quality of care might not rise with ACOs

New research suggests that healthcare costs may decrease when hospitals and medical groups agree to an accountable care model with even one insurer, but the quality of care may stay the same.

One study indicates that progress on two primary aims of the 2010 health reform law has been uneven at best.1 The law's goals were to slow the runaway costs of healthcare and improve quality. The authors note that in a multi-payer system, new payment incentives implemented by one insurer for an accountable care organization (ACO) may also affect spending and quality of care for another insurer's enrollees served by the ACO. "Such spillover effects reflect the extent of organizational efforts to reform care delivery and can contribute to the net impact of ACOs," they write.

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1 comments on "Are ACOs Really Different from HMOs?"


Robert Burden (12/2/2013 at 12:11 PM)
This is exactly what I would expect someone in his position to say. He needs to look around a bit more. There are ACO like organizations that work on a very different model than the one he discribes and are patient focused. There is more than enough waste and abuse in the system that can be better used in turn to provide all the needed care and still save this nation significant money and improve our health status at the same time. Seems like a very self-serving and uneducated article.