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ACO’s: If You Build ‘em, Will They Come?

Even the models for health reform hate the new HHS rule.

The Obama Administration is handing out waivers far and wide for its health-care bill, but behind the scenes the bureaucracy is grinding ahead writing new regulations. The latest example is the rule for Accountable Care Organizations that are supposed to be the crown jewel of cost-saving reform. One problem: The draft rule is so awful that even the models for it say they won’t participate.

The theory for ACOs, as they’re known, is that hospitals, primary-care doctors and specialists will work more efficiently in teams, like at the Mayo Clinic and other top U.S. hospitals. ACOs are meant to fix health care’s too-many-cooks predicament. The average senior on Medicare sees two physicians and five specialists, 13 on average for those with chronic illnesses. Most likely, those doctors aren’t coordinating patient care.

This fragmentation is largely an artifact of Medicare’s price control regime: The classic case study is Duke University Hospital, which cut the costs of treating congestive heart failure by 40% but then dumped the integration program because it lost money under Medicare’s fee schedule.

Intelligent liberals now concede this reality but claim that the government merely needs to devise better price controls. By changing the way it pays, Medicare under the ACO rule is effectively mandating a new business model for practicing medicine. The vague cost-control hope is that ACOs will run pilot programs like Duke’s and the successful ones will become best practices. While the program is voluntary for now, the government’s intention is to make it mandatory in the coming years.

But what if they had an ACO revolution and no one showed up? The American Medical Group Association… (read complete article here).

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