Closing Thoughts on Accountable Care Organizations: A 60% Chance of Making Money and the Concentration of Risk and Power

The Disease Management Care Blog closes its Accountable Care Organization Orgy Week (4 out of 6 of the last posts have to do with ACOs) with two reader alerts.

The first is this very readable New England Journal piece by veteran policy watcher John Iglehart on the latest Medicare Physician Group Practice (PGP) Demonstration results. Ten group practices (two freestanding, two academic faculty, five integrated delivery systems and one hospital sponsored provider network) continued to care for Medicare beneficiaries under fee-for-service, but agreed to invest in organizational change, clinical programs and care management. Doing that meant that they could compete for an upside gainshare based on increased quality and reduced expenditures versus targeted expenditures and "comparison group" measures. Here's the CMS press release, but readers will find the combined clinical and financial results in a neatly summarized table here.

The data are interesting because all of the participants met at least 29 of 32 clinical quality goals but only 6 received any gainshare money over the four years. According to Mr. Iglehart, PGP is a key template being used by CMS to tee up the ACO regulations. It makes the DMCB doubt the nostrum that increased quality means lower cost. More significantly, it wonders about the wisdom of investing millions to participate in a CMS ACO pilot when there is a 60% chance of getting anything back.

The second alert is a repeat of a point made in a prior post: gain sharing is merely a policy stepping stone toward the eventual assumption of insurance risk by these newly formed mega health care organizations. While that experiment in the 1990s was a time of great tribulation, things may be different this time thanks to better information technology and care coordination. Maybe. The prospect of another wave of physician bankruptcies worries the DMCB less than the concentration of power along with the concentration of risk. Not only will these big organizations achieve "too big to fail" status, but they'll be just as tempted as health insurance companies to withhold coverage if it means reducing their losses. If the playing field can be made level, it may not be such a bad idea to have the holders of risk on one side versus the patient advocates on the other. It's like divided government: it's a terrible system until you ponder the alternatives.