The government is counting on holding down health care costs by sharing risk with health care providers, but it is not yet clear whether health care providers are ready to share risk.
A team of researchers led by Suzanne Delbanco of Catalyst for Payment Reform (CPR), San Francisco, a think tank funded in part by West Coast employers, writes about the possible challenges facing organizers of the new Medicare “accountable care organization” (ACO) program in a report commissioned by the Commonwealth Fund, New York.
The Centers for Medicare & Medicaid Services (CMS) recently started implementing a section of the Patient Protection and Affordable Care Act of 2010 (PPACA) that requires Medicare to test whether the ACO concept can help hold down Medicare costs while improving the quality of care.
In an ACO, providers are supposed to join together, either through mergers or alliances, to take financial responsibility for providing and managing care for a whole patient, rather than simply collecting fees for each service rendered.
CMS has proposed setting up a Medicare Shared Savings Program (MSSP) that would establish ACOs that require hospitals, doctors and other providers to meet strict, complicated responsibility requirements.
Any private insurers participating in an ACO also would have to meet strict requirements, such as a 25% cap on health insurer representation on an ACO’s governing body.
In the 1990s, health maintenance organizations and independent practice associations (IPAs) experimented with “capitation arrangements” that paid a flat fee per patient, no matter how sick or healthy the patient was when the contract started, and often ended driving the IPAs out of business.
ACO advocates contend that the new risk-sharing arrangements will use better information technology, better systems for helping patients’ avoid health problems and manage their care, and better risk-management mechanisms.
Delbanco and colleagues say doing a meaningful study predicting how the MSSP ACOs might work is difficult because the U.S. health care system is at “the very early stage of development of these population-based, shared-risk contracts.”
“We found few operational shared-risk payment models; most are in development or at an early stage of implementation,” the researchers say. “Of those that are operational, [3 of the 8 models] launched only in the first quarter of 2011.”
The ACOs that are out there are using different payment arrangements, with some, for example, requiring providers with excessive costs to reimburse the payers. At other ACOs, the researchers say, carriers are trying to shift risk more directly, by using mechanisms such as capitation, bundled payments for related services, and global budgets.
Some provider groups appear to be well-positioned because they already deliver and coordinate whole-patient care, but “it is too early to know whether independent providers can or will reorganize themselves to deliver coordinated care,” the researchers say.
Insurers and other payers will probably have to help the providers organize, but, at this point, neither the providers nor the payers seem to have a complete understanding of what the providers need to be successful, the researchers say.
“The types of support providers need as they organize into and begin operating as ACOs is an area for further study,” the researchers conclude.