Accountable Care Organizations

Section 3022 of the Patient Protection and Affordable Care Act (PPACA) passed in March 2010 spoke of something called Accountable Care Organizations (ACOs).  However, the text of PPACA did not give us many details on ACOs.  Since then, many have been discussing these ACOs, what they might look like, how they will change health care delivery, legal issues surrounding them, what doctors and hospitals should think about them, etc.

Today, the U.S. Department of Health and Human Services (HHS) proposed new rules to help define ACOs.   A press release by HHS informs us:

ACOs create incentives for health care providers to work together to treat an individual patient across care settings – including doctor’s offices, hospitals, and long-term care facilities.

And the fact sheet released by HHS further tells us:

The Medicare Shared Savings Program will reward ACOs that lower growth in health care costs while meeting performance standards on quality of care and putting patients first.  Patient and provider participation in an ACO is purely voluntary.

The information in the press release, fact sheet, and the proposed rules themselves, will hopefully answer many of our questions surrounding this new health care delivery system.  For instance, would large partnerships between doctors and hospitals violate antitrust laws by reducing competition? Will these partnerships violate anti-kickback or Stark laws by referring patients to each other?  How will doctors and hospitals be compensated in ACOs?  How will savings be distributed?  How will we measure quality care under an ACO? Will we track certain health outcomes (e.g. – cholesterol levels) and if so, which ones?  How will we incorporate patient-centered medical homes (see my first post) and health information technology?  And who will ultimately be taking the leading role in each ACO – doctors or hospitals?

The information from HHS provides the following:

  • ACOs can include doctor/hospital group practices; networks of individual practices; partnerships or joint ventures between hospitals and doctors; and hospitals employing ACOs.
  • ACOs must take responsibility for at least 5,000 Medicare patients for 3 years.
  • Medicare will continue their fee-for-service payments (i.e. – a fee for each service like a doctor’s visit, a lab test, or a procedure) but if ACOs performance meets or exceeds quality performance standards, they may be eligible for shared savings.
  • Performance standards in 5 key areas affecting patient care: patient/caregiver experience of care; care coordination; patient safety; preventive health; and at-risk population/frail elderly health.
  • Doctor’s can provide better care because they will have better information about their patients’ medical history and can communicate with other doctors (presumably this is discussing implementation of Health Information Technology like electronic health records).
  • The Department of Justice and Federal Trade Commission have developed guidance to ensure ACOs do not violate antitrust laws.  (see the policy statement at

To summarize, ACOs are partnerships between hospitals and/or doctors who will be responsible for at least 5,000 Medicare patients. and will have to meet certain performance standards to receive shared savings.  ACOs should not violate antitrust laws if they follow the FTC guidance.

Even with the proposed rules and the information provided by HHS, we still don’t have that much information about ACOs.  Many questions remain unanswered.  And more questions arise.  Broadly, will ACOs perpetuate the focus on money instead of health care?  Or will we strike a balance between the two interests?  Will ACOs allow for more patient-centered care?  Will patients have a choice of whether to be in an ACO?  Will there be more coordination?  Will patient’s get healthier?  Will the performance measures every be accurate or meaningful enough?  Will this be just another version of HMOs (Health Maintenance Organizations) – a managed care experiment from the 1990s that were also meant to improve care and cut costs but that did not pan out?

Also more narrow technical questions arise.  How will liability for malpractice shift when hospitals employ doctors (generally because hospitals do not employ doctors, they cannot be sued if only the doctor makes a mistake)?  How will small practices integrate to be eligible to participate as an ACO without selling out? And, related, how can small practices in rural areas participate? Will there be privacy concerns with so many providers having access to each patient’s information?  Will the performance measurements

So maybe today, we haven’t much more clarity than we did yesterday.  Still, the idea of ACOs is advancing and taking shape with HHS expecting implementation of this law in January 2012.

Delivering the best health care in the most efficient manner is an ever evolving, very technical, complicated endeavor.  It will be interesting to see how ACOs develop, how each person will be affected, and what lessons we learn from the process.

Stay tuned for more information (and hopefully more clarity) about ACOs as the rules are developed and adopted, and, once implemented, how they fair in the US court systems.


Below are a few definitions (Please let me know if there are other terms in the text that might need a brief explanation):

*Medicare is a government administered health insurance program for people age 65 or older; some people with certain disabilities; and people of all ages with end-stage renal disease covering hospital, medical, and prescription expenses.

*The Anti-kickback Law makes it a felony for anyone who receives a form of payment in return for referring a patient to another for Medicare or Medicaid-covered services. For example – A laboratory company that does blood testing cannot offer to pay a doctor $20 for every patient that doctor sends to that laboratory.

*Stark Laws prohibit doctors from referring their patients to other entities for some health services Medicare pays for when the doctor or an immediate family member has a financial relationship with the entity.  For example – a doctor cannot refer a patient to get an x-ray at a radiology center in which he has ownership (unless there is an exception).


4 Responses to Accountable Care Organizations

  1. […] The Affordable Care Act proposes new changes in reimbursement by Medicare to hospitals and doctors  – particularly in regards to Accountable Care Organizations. […]

  2. […] written about Accountable Care Organizations (ACOs) in previous posts (Accountable Care Organizations and ACO Performance Measures) which will come to fruition next year.  This week, the Health and […]

  3. […] when I talk to the tech world and I mention the Travis County CHIP, the 1115 Waiver, or Accountable Care Organizations or other policies, I am met with blank stares from “techies.” Some startups in the healthcare […]

  4. […] when I talk to the tech world and I mention the Travis County CHIP, the 1115 Waiver, or Accountable Care Organizations or other policies, I am met with blank stares from “techies.” Some startups in the healthcare […]

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