JONATHAN COHN MARCH 31, 2011
There’s some big news in health care and it has nothing whatsoever to do with repealing the Affordable Care Act. This morning the Obama administration released its proposed regulation for the design of “Accountable Care Organizations.” ACOs are groups of health care providers--doctors, hospitals, etc.--that team up to provide ongoing, coordinated care to their patients. But it’s probably easiest to understand what they are if you think about it from a patient’s perspective.
Imagine you’re in your 50s and you’re relatively healthy, although you have allergies and have recently developed high blood pressure. Then you probably have a general doctor or nurse practitioner, an allergist, and a cardiologist. When you twisted your ankle playing tennis, you also saw an orthopedist, got MRIs at a local screening center, and saw a physical therapist for several weeks. You might have driven all over town to see these different professionals. And it's quite possible they communicated with each other very little, except for a handful of phone calls and memos.
The idea of ACO is to give you one-stop shopping, ideally in one physical setting where you can get most of your health care. Here, the generalists and specialists are in constant contact with each other, handling your chronic condition (in this case, high blood pressure) with a coordinated strategy. When you have some kind of acute episode or emergency, the professionals have your records right in front of them: They know everything from your drug allergies to your complete medical history.
You can imagine why this sort of medical care is better for you. It focuses more on prevention and evidence-based care, while reducing duplication of services. The chances of treatment duplication or, worse, dangerous medical error is far lower. And your checkbook balance will look a little better too, since this kind of care tends to be less expensive overall. All in all, it’s a pretty sweet deal.
This isn’t just some fantasy. Organizations like this already exist and, particularly on the West Coast, they have thrived. And a major goal of the Affordable Care Act is to create more such institutions, by creating financial incentives within Medicare.
But how big should the incentives be? What form should they take? To whom should they apply? The administration has been wrestling with these questions for several months now. Today’s proposed regulation shows how the administration intends to answer them.
One of the big controversies, going in, was whether the financial incentives should include bonuses for organizations that save money as well as penalties for those that don’t--or merely the bonuses for those that save. In other words, it was a question of whether to offer a carrot and stick--or just a carrot. It looks like the administration decided to include both carrot and stick. Most experts I know think that's the better strategy.
Still, that's just one element of the proposed regulation. It has many, many more, and it's going to take a while for experts to assess all of them. I'll report back when they do. ACOs are a key element of the Affordable Care Act's efforts at cost control. It's important that the administration gets this right.