Of the healthcare recommendations announced by the Wall Street Journal’s CEO Council last month, ACOs address all four. First of all, the ACO is clearly a new delivery model that uses the “full continuum of care givers.” But more than that, ACOs align incentives to promote population health, facilitate transparency with patients about health outcomes, and emphasize primary care by basing beneficiary assignment (that is, which patients are designated to be in a given ACO) on a patient’s primary care visits.
With the federal government embroiled in negotiations about the “fiscal cliff,” there is a brand new reason for plans and providers to explore ACOs. As all of us have read, without a deal to avert the “fiscal cliff,” at least two major cuts loom: a two percent cut linked to sequestration, and a colossal 27 percent cut in Medicare payments to physicians that will be caused by the Sustainable Growth Rate. If ACOs and other measures do not succeed in slowing the growth of healthcare costs, the next policy solution may consist of the ultimate “fiscal cliff”: dramatic rate cuts that are chillingly real—not just a specter crafted to scare Congress into action.
America’s healthcare industry is hooked on the fee-for-service system: healthcare by volume. The Medicare ACO program help healthcare providers and systems to kick the habit, allowing them to continue receiving fee-for-service payments while earning additional bonus payments for high performance. Experts have agreed for some time that price caps and all-payer rate setting are the only solutions left if the healthcare system proves unable to rehabilitate itself through delivery system reforms. The government may also impose caps on premium increases.
Thus, while dramatic changes in healthcare are now inevitable, ACOs are a way for industry players to seize the reins and change in ways that benefit them and their patients, rather than becoming the victim of an enforced slashing by government price controllers.
The healthcare industry is now heeding this message. A new report reveals that 25 to 31 million Americans are already receiving their healthcare through ACOs, and more than 40 percent of Americans live in primary care service areas with at least one ACO. The report came to these surprising conclusions via a bold insight: terminology, while important, isn’t the whole story. There are numerous delivery systems using ACO methodology that do not bill themselves as ACOs. When we include these “ACO clones” on our lists, the numbers show that the industry is rapidly embracing coordinated care. Providers should join in and investigate how they can kick the fee-for-service habit—before the government forces them to go cold turkey.
