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Consultant: ACOs Have Momentum

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Accountable care organizations (ACOs) — or other new types of care organizations — are probably going to keep starting up even if Congress repeals the Patient Protection and Affordable Care Act of 2010 (PPACA) or the Supreme Court vaporizes it.

Mark Jamilkowski, an actuary who is a health care consultant at KPMG Advisory, New York, gave that assessment Wednesday in an interview.

An ACO is supposed to be a vehicle for paying teams of health care providers to provide and manage care for whole patients, instead of paying for care one service at a time.

PPACA requires the Centers for Medicare & Medicaid Services (CMS) to try using ACOs and other new approaches to paying doctors and hospitals to get providers to work harder at paying attention to the cost of care, and the ratio of the value of the care delivered to the cost.

CMS has announced two major ACO pilot projects, and private carriers also have been testing ACOs.

KPMG found recently when it conducted a survey of health care providers and private insurers that potJamilkowskiential ACO participants are confused by the Medicare ACO programs and not at all sure they understand how the ACOs will really work.

Are the Medicare ACOs more confusing than the ACO pilot programs already started by the large private insurers, or all ACOs still confusing?

“I don’t think anyone’s got the answer,” Jamilkowski said.

To some extent, he said, setting up any ACO, whether public or private, is difficult, because organizers have to figure out how to get traditional enemies to team up.

Doctors have to assume more health care risk, for example, but insurers, for their part, may find they have to fund medical-office-level care management programs that are open to all people in a community, not  just their own enrollees, Jamilkowski said.

Organizers of any ACO also have to get involved with complicated infrastructure and data collection and analysis projects, Jamilkowski added.

Insurers are already predicting that some providers will use the Medicare ACO programs as an excuse to ignore antitrust laws and collude to jack up prices.

At the employer level, some employers have plan rules banning use of capitation, or contracts that pay provides a flat fee for each enrollee served, because of memories of the disastrous consequences of capitation efforts that killed some large group medical practices back in the 1990s.

ACOs would likely use payment strategies other than traditional, non-risk-adjusted, flat-fee capitation, but some of the capitation provisions could be used to block the kinds of payment arrangements that an ACO might use, Jamilkowski said.

But ACOs, or similar forms of care coordination, are coming, despite the challenges, because of the desperate need to improve the efficiency of the U.S. health care system, Jamilkowski said.

“I think that we’re on a path of transformation that will not stop,” Jamilkowski said.

Private insurers will play a major role in the ACO movement, because, even providers that are willing to assume a substantial amount of health care cost risk in an effort to gain more flexibility are saying that they will need reinsurers or similar organizations to help manage risk, he said.

He said one reason the ACOs are more likely to succeed than the old capitated payment structures is that the technology for collecting and analyzing trends is so much better than it was back in the 1990s.

Back 20 years ago, he said, providers or insurers that wanted to know whether claims were spiking had to load magnetic tapes and run batch jobs.

Today, he said, the numbers are at every one’s fingertips.

Health care organizations also are facing other huge changes, such as the new PPACA medical loss ratio rules and the shift to the ICD-10 diagnostic coding system, from the ICD-9 system now in use.

But the ACO effort is not necessarily being any more neglected than any of the other big projects, Jamilkowski said.

Jamilkowski likened health care organizations to Charlie Callas, a performer on Johnny Carson’s Tonight Show who kept spinning more and more plates on top of a stick.

The ACO effort “is just one more plate on the stick,” Jamilkowski said.