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ACO Creation Driven by Commercial Market

 |  By Philip Betbeze  
   April 29, 2011

Yes, you read that headline correctly. Although what constitutes an accountable care organization has been defined, at least temporarily, by CMS, many of the forces that are actually doing the work of pushing hospitals, health systems, and allied health providers, into ACOs is being done by commercial insurers.

Of course, to change the way they pay for healthcare takes only a decision by an individual company. The feds, on the other hand, must go through revisions, public comment periods, and a phased-in restructuring of payments and incentives that will take years.  

Commercial payers aren't waiting.

They're not calling these programs ACOs, and they're not, in the sense that they meet a government-decreed standard of care. But whatever you call them, they're making healthcare providers more accountable for patients' overall health. So while the government's work is glacial, by comparison, commercial contracting's work on accountable care is lightning-quick.

I came to this realization as I interviewed senior leaders from hospitals and health systems for this month's cover story in HealthLeaders magazine. I started by asking questions about whether my sources were planning on being ACOs as the government defines them. Most of them weren't sure, but they certainly had their own plans in place, and were executing on them, to be accountable for patients' health, simply because their payers were demanding it.

Though many of them were highly interested in what the regs for ACOs would be (I conducted my interviews in late March, well ahead of the release of the proposed federal ACO regs) many of my sources weren't spending too much time worrying about the specifics.

Almost offhandedly, they would continually mention pilot programs embedded in their commercial payer contracts that are a mix of innovative ways to measure value and healthcare quality. There's a kaleidoscope of programs to do this work, and some of them are mentioned in the story, but I think the overall takeaway from this trend is that it's not just the cash-strapped and debt-ridden federal government that recognizes there is a problem with the way healthcare is provided and paid for under the fee-for-service system.

This is a positive sign. It means that unlike in the past, most healthcare organizations are looking for ways to become more efficient and provide more value for the huge sums of money spent on interventions. Maybe they finally believe that in the future, after years of warnings, that healthcare cost increases will be unsustainable and tightly contained via a variety of tools that might or might not have anything to do with how the biggest payer, the government, structures things.

To be sure, most of these programs will undergo changes yearly as payers and providers search for ways, and occasionally butt heads, over what constitutes 'value-added' interventions. But this is happening right now, in 2011, rather than in 2014 or 2019.

That in itself is a reason for optimism.


Philip Betbeze is the senior leadership editor at HealthLeaders.

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