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Accountable Care Organizations: Our Field Of Dreams?



March 30th, 2011

Every year, we look forward to Spring Training. The return of ballplayers to Florida and Arizona provides a sense of optimism that anything is possible in the coming year. However, in releasing the regulations for the shared savings program, is the Centers for Medicare and Medicaid Services starting to sound like the legendary Shoeless Joe Jackson, promising physicians and hospitals that “if they build it, he will come”?

Like Ray Kinsella of the fictional “Field of Dreams,” health care providers are wondering whether they should plow over their productive fee-for-service farmland in order to create new playing fields for accountable care. Are physicians and hospitals ready to trust that the funding really will change from uncoordinated fee-for-service to coordinated value management that rewards outcomes?

After all, the success of the accountable care dream depends on how many patients will fill the seats at every game – accompanied by payment incentives to make investments in new care management models worthwhile. But, if the only player that comes to the field of accountable care dreams is the Medicare shared savings program, it might not be enough to alter the playing field. The success of accountable care requires that Medicaid bring its beneficiaries to the game and that commercial payors deploy their members and incentive dollars, as well.

When we tried this in the 1990s, the patients did not come. While many organizations built Physician-Hospital Organizations (“PHOs”) as foundations for “narrow networks,” preparing to do battle as capitated competitors, relatively few commercial payors brought their patients. The conventional explanation was that payors could not sell narrow network products to employers, as their employees did not want them. When generalists were financially incentivized to withhold referrals and the outcomes were poor, the HMO seats remained empty as the pendulum swung to open PPO networks.

Are we doomed to repeat the failures of the ’90s’? Not necessarily, for this time there are several stronger commitments. The odds for success, however, would be vastly improved if federal and state governments were to exercise several tools that are currently at their fingertips to build and equip the team for success.

What are the new conditions that make this season’s odds for success more favorable than in the past? Obviously, the big one is Medicare. The league’s largest buyer of player services, Medicare is shopping for new forms of delivery and payment. Like free-agent acquisitions, the shared savings program and ACOs with which it will contract are getting most of the attention.

But there are also those who are big fans of the farm system – the CMS innovation center – which promises to deploy $10 billion in additional seed money around accountable care pilots. Compared to the ’90s,when Medicare was not a driver of payment innovation, this year’s field looks immensely different with Medicare promising to bring its patients to the game.

Of equal importance is the potential for Medicaid dollars to support alternative payment methodologies. Certainly, there are Medicaid programs in the queue instigated by the Patient Protection and Affordable Care Act (PPACA), such as a Medicaid pediatric ACO. However, the bigger drivers may well be the budget crises at the state level where billion-dollar deficits in Medicaid programs are forcing states to innovate. The ACO concept is entering the public policy scene at a very opportune moment, when states are grasping for solutions to their Medicaid program deficits and the Secretary of HHS needs tools for states to use that are short of “block grant” solutions.

How else can you build the field, if there are no media rights, parking revenues, sponsorships, pricy concessions and souvenirs to sell? There are two other crucial tools that can be used. While neither has received much policy attention to date, each has the potential to move patients and dollars into the innovation stream.

First, PPACA has set the stage for health insurance exchanges to qualify health plans, in part, based on their use of innovative payment methodologies with providers. If CMS encourages or mandates that exchanges embrace payment reform with participating payors and state implementing laws follow through, this could reverberate across the financing and delivery system.

The second tool is on display in Gov. Deval Patrick’s health care legislation now under consideration in Massachusetts. Like an umpire with a renewed sense of the strike zone, it would require all payors to develop alternative payment methodologies consistent with new state regulations, and to offer these payment formats to ACOs. Massachusetts providers investing in ACOs would not need to speculate as to whether payors would use the new care management platforms, for the legislation assures them that if they build it “they will come.”

Yes, there are other pieces, such as the larger self-funded groups, that will need to be fit in. However, if the ACO ballparks begin to welcome Medicare shared savings, innovative state Medicaid payment streams, health payors with exchange-mediated business and others pushed into the strike zone by alternative payment laws, it is likely that the balance in the delivery system would tip away from a fee-for-service mentality.

At that point, accountable care would leave the realm of dreams (and the movies) and become a viable business strategy for those providers who are today are debating whether to build their ACOs or to remain on the sidelines.

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4 Trackbacks for “Accountable Care Organizations: Our Field Of Dreams?”

  1. A Field of Dreams? | The Health Care Blog
    June 28th, 2011 at 1:55 pm
  2. Patient “Leakage” | The Health Care Blog
    June 28th, 2011 at 1:26 pm
  3. Patient “Leakage”: Rethinking Two Field of Dreams Assumptions About ACOs | e-CareManagement
    June 27th, 2011 at 1:25 pm
  4. The ACO rules are out | The Incidental Economist
    March 31st, 2011 at 6:07 pm

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