Are ACOs going to transition into Medicare Advantage plans?

Long-term issues confronting Medicare Accountable Care Organizations (ACOs)

By David Glass, Sydney McClendon, and Jeff Stensland
MedPAC, April 6, 2018

Slide 3:

Medicare ACOs

Groups of providers held accountable for the cost and quality of care for a group of beneficiaries

Goals of ACOs:

* Improve provider accountability
* Increase quality of care and patient experience
* Lower costs

If ACOs are successful, they are rewarded with shared savings.

Slide 16:

Are ACOs only a transition step to Medicare Advantage plans?

* Eventually ACOs will want to be MA plans because that is the most efficient model
* MA plans require beneficiary enrollment and have higher administrative costs
* We found in some markets ACOs were the low-cost model
     * Lower administrative cost
     * If ACO dominant, may get benefits of limited network without ‘lock-in’



By Don McCanne, M.D.

We really do need to listen to what MedPAC (Medicare Payment Advisory Committee) has to say since it is the source of much of the legislative changes in Medicare financing, and we have to live with what the committee members produce once it is sanctioned by Congress.

SGR (sustainable growth rate) was a failure in trying to control Medicare spending and thus was replaced by MIPs (Merit-based Incentive Payment System) and APMs (Alternative Payment Models). Although the Trump administration is moving forward with MIPS, MedPAC has recognized that it is already a failure and has recommended that it be terminated and that transition into APMs be accelerated.

Although concepts of APMs are not settled it looks like ACOs (accountable care organizations) are going to be the primary model of APMs, and they are already being pushed heavily as a means of paying for value instead of volume.

Although ACOs have some vague similarities to HMOs, there are ill-defined features that remain a problem. Patients do not enroll in ACOs, so who is accountable for their care? It is difficult enough to decide who is providing their primary care when there are so many other sources of care, and it is especially difficult to assign specialists to specific ACOs. Although most ACOs are currently one-sided (upside risk only), there is an effort to push them into two-sided models (upside and downside risk), supposedly with the promise of greater savings for Medicare.

ACO managers understandably are hesitant to accept downside risk since it requires them to reduce their spending (reduce their revenues) which really means reducing health care services for patients. Cold hearted businessmen may not have problems with that if they can convert some of the savings into profits, but most health care professionals would resent being continually hounded to cut back on the amount of care they are delivering.

It appears that, instead of abandoning the ACO concept, our policymakers want to move forward with the concept because it would reduce volume by reducing patient care services, and supposedly increase value by being able to care for more patients with reduced services without increasing net costs.

But to move forward, the ACO model must be better defined. It has been suggested that an ACO must define which primary care practitioners, specialists and hospitals are in the ACO, i.e., networks must be established. Also patients must be specifically assigned to a given ACO, i.e., enrolled, even if by default. Specific financing arrangements must be made whether capitation, bundling, or even fee-for-service for those services that do not fit into a neat package. It's astonishing how these geniuses in health policy come up with these innovative ideas. Little does it matter that their concept of ACOs is remarkably like HMOs and PPOs of the past.

So where does that put us? Well, Medicare already has something like that in place - the private Medicare Advantage plans. So it has been suggested that Medicare providers form two-sided ACOs as APMs and then transition them into Medicare Advantage plans in which eventually all Medicare patients are enrolled. Talk about a devious way of setting up premium support (vouchers for privatized Medicare).

Apparently it is such a sure thing that House Speaker Paul Ryan, for whom Medicare premium support has been his career dream, today announced his retirement. Well, maybe not quite that sure of a thing, but defensive posturing is not enough. We need to take the offensive on behalf of a well designed single payer national health program - an Improved Medicare for All.

Reform must put patients first, not the medical-industrial complex. Create the system to serve patients well, and it will work just fine for those legitimately employed in the health care delivery system.

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