Accountable (I don’t) Care Organizations

Here’s your weekly health care reform education.

There are a couple of pieces of the PPACA (Patient Protection and Affordable Care Act) or health care reform that will potentially allow hospitals and other providers to earn a little more money.  One of these aspects is the Accountable Care Organization or ACO. 

An ACO is made up of providers who are paid incentive to reduce the rate of spending for Medicare beneficiaries under their care.  The providers in the ACO are physicians, both primary care and specialty, and hospitals.  If the spending for Medicare beneficiaries in the ACO is less than the median for other beneficiaries in the same region CMS will keep a portion of the savings and then divide the remaining savings amongst those providers in the ACO.

Let’s say we created our own ACO, here’s how it would work.  We’ll call our ACO – ACOGVMH.

ACOGVMH average spending for Medicare beneficiaries in 2012 is $85.  Average spending for Medicare beneficiaries in the same region is $100.  ACOGVMH saved $15 per beneficiary. 

CMS will keep $5 of the savings from each beneficiary and then divide the remaining $10 in savings between the providers in the ACOGVMH.

Sounds great.  Be efficient, provide great care, focus on quality = extra money.  In theory it makes sense but in reality I’m not sure it works for rural providers.

First you’ve got to have a minimum of 5,000 Medicare beneficiaries to qualify.  In the case of ACOGVMH our entire service area is around 60,000 so we probably have 5,000 Medicare beneficiaries but we don’t provide enough specialty services to meet all of their needs and we might not be the shortest drive for services and the smaller the pool of people the greater your risk.  If you only had the minimum 5,000 under your care a couple high dollar catastrophic illnesses could wipe out any potential savings.  It will also take a huge investment in IT to coordinate care between providers and I’m not sure we could ever recoup our costs.

Forming our own ACO just doesn’t make sense (cent$) for a lot of reasons.  It is possible that an established ACO may be attracted to our strong primary care base and want to partner with us which would make sense (cent$).  We should also keep our ear to the tracks and be cautious of competitors trying to make inroads in our community, we might find that an ACO is trying to attract our patients and if that were to happen our patient base could go away.

I hope you at least understand ACO’s at this point.  I’ve not yet figured out how, and if, we fit into one but stay tuned.  If we know anything, we know that the years ahead will require us to be flexible and open to change.

About Craig Thompson

I am a young professional with two great sons, and I work in the healthcare setting. I am employed in hospital administration and serve as Chief Operating Officer at Golden Valley Memorial Healthcare in Clinton, Missouri. These are challenging and exciting times in healthcare and my blog will focus on healthcare, raising boys or being raised by boys, and living in mid America.
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