Are ACOs Sustainable?

The Centers for Medicare & Medicaid Services (CMS) recently proposed changes to the Medicare Shared Savings Program (MSSP) in a desperate attempt to save Accountable Care Organizations (ACOs). Unfortunately, the proposals once again fall short and fail to address what the ACOs have been asking for.

As I addressed in my last post, the cost of operations and collecting quality metrics is causing many ACOs to fail. In fact, some 80% of ACOs in the MSSP are losing money! Leading health economist Paul Keckley, Ph.D. commented on the recent CMS proposals. “So what CMS did not do is address the concerns of many of the ACOs to comply with the rules and report the quality measures. It’s going to cost ACOs more than they save.” He continued by predicting that if the proposals are implemented as is, we will see even more ACOs drop out of the Medicare program.

As I have stated in previous posts, a major issue with the Affordable Care Act is misaligned incentives. Dr. Robert Pearl, chairman of the Council of Accountable Physician Practices confirms this notion. “While ACOs might receive payment on a prepaid basis, the physicians and hospitals inside the ACO are often still reimbursed based on volume. As a result, providers often don’t have an incentive to work together to find more effective ways to deliver clinical care. And when patients seek care outside of the ACO, physicians are at financial risk for care that may be unnecessary or inappropriate.”

So, are ACOs sustainable? It most certainly does not seem so at this point in time. As Dr. Pearl stated, “Even among the most efficient practices, the cost of delivering care must be adequately funded. When payments are too low for physicians to deliver quality care and keep their practices viable, there is no good solution.” And once again, healthcare reform fails to consider physicians as stakeholders. “Physicians often feel relatively powerless and struggle to commit fully to the goals of performance improvement and cost containment,” says Dr. Pearl.

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