The Truth About Accountable Care Organizations

The Theory Behind the ACO

The PPACA, The Patient Protection and Affordable Care Act, has enabled the creation of so-called Accountable Care Organizations. These organizations are designed to create partnerships between various components of the healthcare delivery system including physicians, hospitals, health insurance companies, government health insurance, pharmaceutical companies and just about everybody involved in providing care to a patient. The idea is to create an organization that will provide comprehensive, coordinated and seamless medical care to patients, which will provide high quality care based on what is known as Evidence Based Medicine and is also cost effective. These organizations will be expected to provide patients with immunizations, nutritional education, medications and everything that guidelines from Evidenced Based Medicinerecommends for optimal patient care for disease prevention and chronic condition management. The key component is that the ACO will receive a lump sum payment, from a government insurance plan like Medicare or a commercial insurer, to divide among the various parties caring for the patient including primary care physician, specialty physician, radiology, durable medical equipment suppliers, pharmacists, the hospital etc. If the ACO provides quality care based on metrics set by the government or insurance company and saves money on the estimated average cost for the patient’s condition, the accountable care organization will receive a bonus to distribute to various providers of service including the physicians. Physicians will no longer receive a fee for each service they perform, but will be given some sort of basic payment per patient similar to HMO capitation.

The ACO will be given a specific pool of Medicare patients, at least 5,000, to care for in a comprehensive fashion and will strive to produce theoretical savings from the estimated cost of the care for these 5000 Medicare patients. As you can see there will be a fair amount of government estimations of the cost for caring for these patients. Savings are achieved, in theory, by promoting preventive medicine, coordinating care and utilizing other means to keep patients healthy and avoid unnecessary hospitalizations.

The Problem with ACOs

Critics of the ACO system are concerned that there seems to be an emphasis more on accountability than the care. One of the ways that quality will be measured is comparison of the cost of care from one doctor to another. If two physicians treat a case of back pain and get the same result the quality is not necessarily the same because one physician may have spent too much money in treating the patient. An MRI may not have been necessary for the patient to recover from a minor back strain. Therefore there will be pressure on physicians to avoid overtreatment and overspending. Established protocols will set an arbitrary amount cost target, for a particular condition, required for its care. The physicians who are able to provide effective care at lower costs will likely be the ones to receive bonuses. Physicians may also shy away from treating complicated patients or noncompliant patients who may require more care increasing the ACO’s expense. Risk is only shared by the providers of the care, not the patient themselves. Many doctors are dubious about putting themselves at financial risk with patients who have no incentive to follow medical advice or to change to more healthy lifestyles.

Critics of the ACO system are concerned that there seems to be an emphasis more on accountability than the care.

Many physicians are skeptical of this sort of partnership arrangement between physicians and hospitals or health insurance companies. Physicians who are employed by the health insurance companies or hospitals to work in ACOs dominated by the funding from the insurance company or hospital will have very little say when it comes to the finding quality and costs. It also remains to be seen whether physician directed ACOs will survive without deep capitalization pockets. Many feel that ultimately ACOs will either be hospital or insurance company owned and operated.

Saving Money at the Expense of Quality Care

Many feel that ACOs are not primarily interested in quality as much as they are interested in saving money.

When it comes to deviating from established treatment protocols. Many feel that these organizations are not primarily interested in quality as much as they are interested in saving money. If the doctor’s salary or bonus is dependent upon strictly following “cookbook medicine” protocols, what will happen if a patient has a condition that requires spending more money that is allotted? This sounds very reminiscent of the HMO experience of the 1980s, which the public soundly rejected when it was clear that there were financial incentives in place that clearly put the physician and the patient in conflict of interest. It is hard to see the difference between the HMO financial incentives for physicians of the 1980s and the ACO financial incentives created by the PPACA.

What could this mean for the doctor-patient relationship?

If the patient does not realize that their physician is seeing them as part of an ACO, what will happen if that patient comes in complaining of chest pain? Their physician may think to themselves, ”Hmmm, this 43-year-old woman who is complaining of some substernal chest discomfort could have a cardiac condition or heartburn.” The protocol from the ACO suggests that she has low risk factors and therefore should not be given a stress test and quality dictates she should be empirically treated for heartburn with over-the-counter medication. Since the physician is focused on efficient care, he may elect to follow the ACO conservative low cost protocol. On the other hand, a personal physician knowing this patient very well may have a different take.

Suppose she is a patient who rarely complains of anything. Knowing this, an astute physician with many years of experience may reason that it is important to rule out a serious condition first such as an impending heart attack even if the odds favored the heartburn as the cause. A patient who puts their trust in their physician to do what is called for, may be taken aback when the physicians judgment is influenced by how his ACO employer views his decision to deviate from the ACO protocol and order the expensive heart stress test. Suppose the physician had a similar case earlier and chose to do the stress test, which was negative. Now faced with another similar situation, not wanting to cause further damage to his cost profile, the physician may be even more biased towards conservative care. Who would want to be a patient of a physician who was under pressure to avoid spending money on tests that turn out to be negative? Furthermore the physician does not inform the patient that his or her judgment could be also influenced by the bonus system involved with the ACO. The patient cannot read the physician’s mind.

The Nu-Living Concierge Medical Practice

Contrast this situation with how Dr. Terlinsky would care for a patient in his Nu-Living Concierge Medical Practice. Dr. Terlinsky has only one concern with this patient: is she in danger of having a heart attack? Does she need to be hospitalized? Should I have a cardiologist see her tomorrow? Moreover, if the next patient Dr. Terlinsky sees has another problem, should Dr. Terlinsky worry that his decision on the previous patient could place limitations on his approach to the next patient? The traditional relationship between the doctor and the patient provides for the doctor to do everything his knowledge, skill and perhaps his gut instinct tells him to do the benefit of the patient. There is no room for the doctor’s personal gain or threat of personal loss to influence his decision. Patients are likely to learn about this change in the relationship between their doctor and themselves under an arrangement such as the plan for an ACO. It goes without saying that Dr Terlinsky pledges not to participate with any ACO, similar to his decision to avoid participation in the old capitated HMOs.