Weighing Whether an ACO is Right for Your Medical Practice

October 21, 2012

Accountable care organizations are the latest magic solution offered by the federal government. Just don’t pull back the curtain!

A poll published Thursday by The Kaiser Foundation revealed that 9 out of 10 seniors are very satisfied with their Medicare coverage.

“Fifty million Americans are relying on the program and they’re very satisfied with it,” said pollster Rebecca Ray. “They like the current version. They like the version they’re receiving now.”

CMS is currently conducting pilot programs which change the way Medicare pays for physician services. Accountable care organizations (ACOs) are very similar to the old HMO models which ration care under a capitation, or per-person basis. If the ACO saves the government money, the group of physicians who formed the HMO earn a bonus.

In 1965, Congress brought to seniors a package of Medicare benefits, backed by the full faith and credit of the U.S. Treasury. Congress did it again in 2003.  Much like the Wizard of Oz, Congress seemingly had the power to grant wishes as if all things are magically possible. Medicare Part D added a drug benefit to the package.

But even in the Land of Oz, all things are not magically possible. There is this curtain, you see.  And if you pull it back, things get ugly. We can’t pay for all those benefits. Back in 1965, physicians were promised two things: one, the government would pay 80 percent of the usual and customary fee for services; and two, the government would not seek volume discounts from physicians. Over time, the government reneged on these promises. CMS has literally tried everything to bring down the costs of Medicare, from fee schedules, all-inclusive rates, mandatory bundling, and payments to hospitals based upon diagnosis - and we still can’t afford to keep Medicare solvent.

According to a recent Forbes Magazine article, by 2019, further cuts in physician fee schedules will be "so draconian that payments become even lower than Medicaid, a system by which doctors already lose money and most refuse to accept patients."

ACOs are a tricky subject both in the halls of Congress and medical industry groups. Seniors like the system the way it is. It is thought to be political suicide to threaten to limit benefits. It is not clear how CMS plans to encourage seniors to sign up to trade freedom of choice, for what is essentially an HMO. Medical associations are naturally wary of any promise made by Washington, D.C.  

Historically, the government has sold a new program by making the initial deal too good to pass up. With ACOs, however, even in the beginning the carrot frankly doesn’t sound all that tempting. In fact, the greatest selling point for physicians may be the fear of being left out of an ACO, with a fee-for-service schedule lower than current Medicaid levels.

At this point, it is difficult to even know the right questions to ask. Fortunately, the American Academy of Family Physicians (AAFP) has published an excellent list of frequently asked questions about ACOs, subtitled “Everything you need to know about Accountable Care Organizations (in plain English).”  

Here, the AAFP answers many questions, such as: 1.) whether you should sell your practice to an ACO, or be left out; 2.) whether the monetary incentives are sufficient to transform practice patterns, or if ACOs are just a passing fad; and 3.) what actions you can take immediately. As with any time of great transition, education and careful investigation of your options can be the greatest investment of your time to ensure you make the decision which is right for you.