ACCOUNTABLE CARE ORGANIZATIONS
ONE MORE BUREAUCRACY IN THE HEALTH CARE HIERARCHY

20th April 2011

Acting under the provisions of Section 3022 of the Patient Protection and Affordable Care Act (Health Care Reform), the Department of Health and Human Services (HHS) has released proposed rules for Accountable Care Organizations (ACOs). The assumption is that they will save the public a lot of agony and the Government a lot of expense, Thoughtful examination shows they will do neither.

HHS claims ACOs are called for, otherwise doctors, hospitals and other providers will be incapable of coordinating patient care, but the market provides strong evidence that health care providers can successfully learn to coordinate patient care without assistance from Big Brother.¹

HHS’s document notes that more than half of Medicare beneficiaries have multiple chronic conditions. Since these patients often receive care from multiple physicians, failure to coordinate treatment can lead to patients not getting needed care, receiving duplicative (sic) care, and being at an increased risk of suffering medical errors. HHS makes no comment on how much coordinated care already exists, how it is provided, nor what improvements are already on the way.

Its proposal observes that on average, each year, one in seven Medicare patients admitted to a hospital has been subject to a harmful medical mistake in the course of their care. Since failed coordination is only one factor in medical mistakes, this statistic presents a false impression.

HHS further observes that nearly one in five Medicare patients discharged from a hospital is readmitted within 30 days which is true, but its statement that, many of these patients could have avoided readmission if their care outside of the hospital had been aggressive and better coordinated, is unconvincing. “Many” begs the question of what specific percent of these readmissions could not have been avoided. And the supposition that aggressive care improves matters is, from the patient’s point of view, not always justified.

Then HHS uses these assertions to claim that the regulations proposed for ACOs, could save Medicare as much as $960 million over three years. Considering that Gundersen Lutheran of LaCrosse, Wisconsin saved $10 million in the first year of a coordinated care program it established on its own (op cit), it seems entirely possible that the savings HHS proposes could be realized without Government interference or coercion.

Though the HHS makes a clear argument that care for certain courses of treatment needs to be better organized, its contentions fail to support the need for an additional bureaucracy to do it. All HHS seems to have justified so far is that refusal on a patient’s part to accept aggressive treatment when medically called for justifies added hospital charges to the patient or denial of readmission within a given period of time for the specified cause or causes, but here it offers no rules to deal with this concern. Don’t hold your breath.

Having failed to make a decent argument for the need for ACOs, the HHS release then goes on to describe how they are supposed to work using a process of “shared savings”.

Under the proposed rule, Medicare would continue to underpay non-complying health care providers and suppliers for goods and services provided.  The Center for Medicare Services (CMS) would develop benchmarks for each ACO initially based I suppose on noncompliant facility results. Each ACO’s performance is then measured to assess whether it qualifies to receive “shared savings”, or to be held accountable for losses. That way, providers who agree to follow Medicare’s proscribed process may hope to receive less inadequate reimbursement for their services.

The upshot of paying rewards for “savings” will be that all providers will soon enough be forced to join ACOs of one sort of the other or close up shop. Absent any non-complying providers to use as a reference point “savings” will evaporate. An ever increasing list of stipulations and restrictions imposed in search of further elusive “savings” will only be aggravated by the Government’s historic unwillingness to meet its promises. Just as in Lake Wobegone and the former USSR, everyone will be expected to be above average.

It is instructive to note that much of the cause for HHS’s complaints ironically is its own doing. By underpaying for goods and services in the first place, as Medicare has continuously done, it has driven providers to concentrate on quantity at the expense of quality, on the appearance of care at the expense of real care, and to generate an apparent need for ACOs.

In a tacit admission of ACOs’ stultifying effect on much needed innovation, HHS points out that the Affordable Care Act establishes a new Center for Medicare and Medicaid Innovation to test innovative care and service delivery models, presumably with prior approval based on a proposal. In other words the Government is now to decide what is innovative, and what is not.

Although as HHS asserts, ACOs will allow people to have better control over their health care, and their doctors to provide better care because they will have better information about their patients’ medical history and can communicate with a patient’s other doctors, there is nothing in that mission statement which cannot, and is not already being done in the private market without the damaging financial coercion HHS proposes to impose or the bloated, hidebound, restrictive bureaucracy it is bound to establish.

It strikes me that once a Government begins to stir the soup, keeping up appearances becomes the rule.



by: Michael Goldeen

¹ http://www.gundluth.org/upload/docs/CareCoordination.pdf, http://www.ihe.net/pcc/committees/index.cfm