An ACO Debate

Let the debate begin!

If the Disease Management Care Blog can't personally debate former CMS Administrator Don Berwick on the merits of Medicare-style ACOs, it'll just have to have settle for letting others do the heavy lifting.  In this Wall Street Journal article, skeptics Jeff Goldsmith and Thomas Scully ably take on Dr. Berwick's cherished assumptions in a well edited point-counterpoint exchange.

Your ever helpful DMCB provides a short summary of the highlights for its busy readers.   

Donald Berwick:   What the Affordable Care Act seeks is reasonable: high quality, low cost and open access that strikes a balance between unfettered fee for service and onerous managed care.  ACOs take the best features of health maintenance organizations, such as coordinated care and provider incentives to save money, but without the worst, such as restricted networks that hamper patient choice.  Many provider organizations seem to agree.  That's why interest in participating as ACOs is high. Smart providers will figure out how to do ACOs profitably.  What's more, private insurers have adopted the model, so there must be some merit to the notion of ACOs.  Last but not least, if ACO's work out, the savings will accumulate into billions in the years to come. That's when we can think about next steps, such as partially capitated arrangements.

In addition, thanks to the lessons of managed care and the Physician Group Practice Demo, ACOs will be transparent and high quality with closely monitored gain sharing, governance and information systems. What's more, thanks to its Innovations Center - Medicare will find ways to be flexible over the start-up costs of ACOs with advanced payments.

Hey, this is one experiment among the many innovations of the Affordable Care Act.  The negative murmurings of the malcontents below may be right, but we don't know that and ACOs are still worth a try.

Jeff Goldsmith: Berwick's vision looks good but it's an unreal mirage.  That's because provider organizations a) will have to spend more money than they can possibly recoup in shared savings and b) are fundamentally configured to admit to expensive hospitals and rely on pricey high-end specialists.  While CBO projects mucho savings, it's really a lot of inside-the-beltway "budget dust." We know that because in CMS's Physician Group Practice Demo that formed the basis of ACO blueprint, eight out of ten participants lost money. That's because they were unable to scale the resources necessary to care for their sickest patients.  The two participants that made money probably did so because of creative coding.   Last but not least, remember that Medicare beneficiaries in ACOs - because they're completely protected from any economic downside - have little incentive to moderate their consumption of health care. 

Thomas Scully:  Nice try Dr. Berwick, but there are credible data that say that ACOs cost as much as $30 million to start up.  The start up price tag is not only putting hospitals in the driver's seat, there's a good chance that they'll turn into market dominant oligopolies. It's that luster of control, not saving money, that has driven provider interest in ACOs  If you want to save money, drop Medicare's dysfunctional price fixing, forget about ACOs and give the docs control of all the money in fully capitated arrangements based out of a private insurance system that fosters competition, like TriCare and the Federal Employees Health Plan.