ACOs and the Nationalization of Healthcare
By John C. Goodman • Monday January 21, 2013 11:24 AM PDT • 3 Comments
Accountable Care Organizations are the portal through which we will all march toward a truly nationalized healthcare system. I don’t know any advocates of ACOs who are not also advocates of global budgets, under which providers are given a fixed amount of money to spend and forced to ration care if the funds prove to be inadequate—as they do in Britain and Canada.
ACOs have been described as “HMOs on steroids.” On paper, it sounds as though doctors will be rewarded for providing higher quality services. In practice, ACOs may reward doctors for underproviding care, as traditional HMOs were accused of doing.[1]
Moreover, the business model of the ACO requires that patients see only the doctors that the ACO employs. If you are getting care from an ACO, therefore, your insurance may not pay for you to see doctors outside the ACO. Also, part of the ACO vision is that all doctors and nurses will practice medicine in the same way. This means that when you visit an ACO clinic, you will not necessarily see the same doctor you saw on your last visit. ACOs will probably be given a lot of freedom to limit the terms and circumstances under which you can see doctors.
Nationwide, Medicare started paying fees to ACOs in 2012. Eventually, the Obama administration would like to see everyone in an ACO.
But if no one had any previous interest in forming ACOs, let alone joining them, what is going to cause them all to change our minds? Money. Insurers won’t be able to get premium increases unless they adopt ACO plans. Doctors and hospitals will be paid less if they don’t join. Eventually, doctors will find they are ineligible to treat Medicare patients or patients insured in the newly created health insurance exchanges if they are not practicing in ACOs. As for the patients, there won’t be any plans to join other than ACO plans.
ACOs will have capitated payments—the organization gets a fixed annual fee per patient, regardless of the costs that patient actually incurs—and, like the traditional HMO, the ACO will get to keep any money it doesn’t spend. The organization will also incorporate all the latest fads in health policy: electronic medical records, pay-for-performance incentives, quality report cards, and so on.
The results from the early demonstration projects with ACOs have been lackluster and mixed.[2] A comprehensive review of all the studies of report cards and other quality-measuring-and-reporting techniques finds they don’t work and may do more harm than good.[3] Just as teachers will “teach to the test” if test results are how they are graded and rewarded, doctors will tend to “practice medicine to the test” if that is how they are paid. If you’re the patient, that may not be good for you. A comprehensive review of all the studies of electronic medical records finds they do not live up to their promises.[4] And a recent study of pay-for-performance from Britain finds that it doesn’t work either.[5] As Scott Gottlieb, a former US Food & Drug Administration deputy commissioner and writer on health policy, has pointed out, the ACA approach will stifle innovation and entrepreneurship and is already causing venture capital to leave the healthcare market.[6]
So how do we explain the administration’s commitment to ACOs? Whether they raise or lower costs, whether they raise or lower quality, there is one thing that ACOs will indisputably accomplish. They will drive doctors into organizations where their behavior can be controlled.[7] For the first time in our history, both the practice of medicine and the way money is spent on medical care will fall under federal control.
Notes:
- For a discussion, see Anna Wilde Mathews, “Can Accountable-Care Organizations Improve Health Care While Reducing Costs?” Wall Street Journal, January 23, 2012.
- Jeff Goldsmith, “The Accountable Care Organization: Not Ready for Prime Time.” Amy Goldstein, “Experiment to Lower Medicare Costs did not Save Much Money,” Washington Post, June 1, 2011.
- David Dranove, “Quality Disclosure and Certification: Theory and Practice,” Journal of Economic Literature, 48 (2010): 935–963, doi: 10.1257/jel.48.4.935.
- Ashley D. Black et al., “The Impact of eHealth on the Quality and Safety of Health- care: A Systematic Overview,” PloSMedicine (2011), http://www.plosmedicine.org/article/info%3Adoi%2F10.1371%2Fjournal.pmed.1000387
- Brian Serumaga et al., “Effect of Pay for Performance on the Management and Outcomes of Hypertension in the United Kingdom: Interrupted Time Series Study,” British Journal of Medicine (2011), doi: 10.1136/bmj.d108.
- Scott Gottlieb, “Accountable Care Organizations: The End of Innovation in Medicine?” American Enterprise Institute for Public Policy Research, No. 3, February 2011, http://www.aei.org/files/2011/02/16/HPO-2011-03-g.pdf.
- Gottlieb, “Accountable Care Organizations: The End of Innovation in Medicine?”
[Cross-posted at Psychology Today]
Tags: Healthcare, Regulation 
“... it sounds as though doctors will be rewarded for providing higher quality services...”
Doctors will be rewarded for gaming the system, just like they are today (in Medicare and Medicaid). The quality indicators mostly will be clinically irrelevant items chosen by bureaucrats. (I was a VA hospital physician, and many of our “quality” indicators were related to medical practices that were substandard a decade earlier.) Doctors who want more reimbursement will play the quality indicator game even when that results in lower quality care. Providing such care won’t be malpractice, because that care exactly matches “community standards.”
Next year will be a great one (for emigrating).
MingoV | Jan 21, 2013 | Reply
John–You are right that one core idea in the minds of Ezekiel Emmanuel and Don Berwick is that there is a Platonic ideal way to practice medicine that transcends all forces that would make medical care vary, and that it is acceptable to impose that on this field.
It is medical tyranny and it will drive the best doctors out first, followed by those who resent being forced into ACO slavery. We already have the leading edge of this phenomenon in the case of Medicaid where the decisions of case managers on the other end of a phone are powerful enough to overcome the professional judgment of the attending physician. Combine the loss of independent decision-making with low payment and one sees the disappearance of that group from the medical workforce. How two physicians can look at the US and see it as amenable to standardization of this kind indicates a medical hubris worthy of the Eighteenth century where one still used leeches to bring down fever.”
Very worried and in hopes of a backlash...
Wanda Jones, MPH
New Century Healthcare Institute
San Francisco
wanda J. Jones | Jan 21, 2013 | Reply
Where do we see improved quality and lower costs in health services? Answer: Only where there is free competition between providers to deliver the most service at the lowest cost. Where the patient, not the provider, is making the actual decisions. Where there is no governmental involvement in the process. No prescription laws, no government licensing, etc. Where people compete to provide goods and services. Why do Americans pay less for food than do people living in other developed countries? Name one thing that is actually “cheaper” in total cost because government is providing it? If you do the research, you’ll find out that government supplied services always cost “more” when total costs are considered. Whenever government regulates anything (often producing a monopoly situation) you’ll find higher costs and poorer services. This is “why” Obamacare will increase costs, not reduce them. The individual might find that the service appears to be “cheaper”, but that is because someone else is paying part of the bill...
Jerome Bigge | Jan 22, 2013 | Reply