Healthcare as we know it is undergoing immense changes. For someone in the healthcare industry, this comes as no surprise. Many of these changes will specifically affect the insurance industry and how physicians receive reimbursement for their care of patients. Through all the shouting and politically slanted talk, no one has really discussed a reimbursement approach that is based on the performance of a physician. The core of this idea is the so-called Accountable Care Organizations.
There have been some talk of these organizations in the past, but what exactly are they? An ACO is very similar in structure to the HMO. The ACO is designed to be a coordinated effort between healthcare providers to provide the best quality of care possible for a population of Medicare patients and to reduce overall healthcare costs. This means that health care providers will voluntarily come together to form the ACO and patients will be able to be treated by any provider in the organization. The main theme in the organization is that the group of providers is directly responsible for the quality of care, costs, and reimbursements. In theory, if a group of providers is responsible for all of these aspects then the quality of care and the savings for Medicare will all increase. Providers accomplish this by only ordering necessary tests and labs and by incorporating preventative measures. An ACO can reduce the amount of duplication of procedures and is designed specifically to improve the care for the chronically ill.
The ACO also can be very beneficial to the group of providers that run the organization. By improving the efficiency of the care for patients, there will be savings in the cost of care. Providers in the ACO will be able to share these savings and the federal government will reimburse the organization. To what extent and how the reimbursements are paid out are dependent on the type of plan that a group chooses. Due to the fact that an ACO is performance based, members will also have to share in the overall losses. The hope is that this will encourage a better performance by providers.
Figure 1. Eligible Organizations (click on graphic for clearer view)
Much of the increase in the amount of ACO’s in the United States has taken place after the implementation of the Affordable Care Act. In section 3022 of the law, the establishment of an ACO is outlined and the requirements for doing so are listed. Many commentators have pointed to the similarities between an HMO and the ACO. Although it may seem that ACO’s are very similar to the HMO there are several differences. The ACO is not run by insurers but instead by the providers. If the providers stick to the quality metrics agreed that is agreed with the insurers, they may work within their own framework. The patients that an ACO serves are not confined only to those physicians and may seek treatment from providers outside the organization. This freedom may correct some of the problems that plagued the HMO. With currently 25-30 million patients in the United States covered by an ACO, the trend is starting catch on. It will be interesting to see how healthcare costs and quality of care improves in the future once providers see the full potential of the idea.