This question seems to be getting a lot of buzz lately. What does it mean?
Where did it come from? Why are we even talking about it?
To answer this question let’s start with a little background.
The very first Congress of the United States of America met March 4, 1789.
It focused on setting up departments (War, State, Treasury, Judiciary,
etc.) and attending to the inauguration of the first President of the
US…things like that. First-time stuff, formative stuff, stuff that
is still in existence. And nine years later, in 1798, they again did something
for the first time….Congress enacted a health care law. This law
set up a network of federal hospitals across the country to care for the
needs of merchant seamen who were sick or disabled. Why is this important
to know? Because it is part of the reality that in our country the US
government has been involved in health care when it is in our national
interest, and they have done so since our formation. More laws followed
and over the next two centuries Congress enacted many health related laws:
the Office of the Surgeon General, national laboratories to examine disease,
restrictions on smoking, the formation of Medicare and Medicaid, followed
by the extension of Medicare benefits to cover prescription drugs, and
now to the passage of the Accountable Care Act, sometimes called Obamacare.
The Accountable Care Act is a major piece of legislation that covers the
proverbial ‘waterfront’ of all things dealing with health.
Why do we have this new law? In short,--it is primarily to help reduce
the growth rate of health care spending. When I entered graduate school
the percentage of the GDP for health was just a little over 5%. Now it
is pushing 18%; and the Congessional Budget Office projected it would
be 46% of the GDP by 2080. Half of this total cost is paid for by government.
In looking at other countries for comparison researchers found that the
US spent about twice as much per person as the next nearest country spent
and we actually had poorer health statistics to show for it.
As a result of this growing cost, as well as other issues related to performance,
Congress passed the Affordable Care Act (ACA) with all its many parts
and pieces. The ACA is designed to address primarily three things: cost,
quality and access. The law has many components to achieve this “triple
aim” and structural modification (that is, developing new models
of care delivery) is one of them. Some structural components mentioned
in the law are: value-based purchasing, transitional care, primary care
medical homes, bundled payments, and accountable care organizations. There
were few mentions of this potential new structure called an Accountable
Care Organization (ACO). So, what is this?
Simply put, an ACO is a group of health care providers, such as: physicians,
nurse practitioners, hospitals, home health agencies, nursing homes, rehab
facilities, payers, etc.. These providers voluntarily agree to collaborate
and coordinate the care for a defined group of patients with the goal
of improving this defined populations' health, reducing cost of care
and improving the care experience for its patient population. If preset,
measurable goals are achieved, then the ACO may be able to receive a financial
reward. If a Medicare ACO this is sometimes called, ‘shared savings’
because the reward must come from the money saved. [Gamble and Punke,
Fifty Things to Know About Accountable Care Organizations] It is projected
that ACOs will save the Medicare program over $900 Million in the first
few years. An ACO can participate in Medicare as well as private employer
or insurance company health plans.
By the end of 2013 there were approximately 500 ACO’s throughout
the country covering more than 43 million people. As I write this, ACOs
continue to proliferate and grow in number, as well as specialty focus.
About half of these are Medicare ACO’s. What does it mean for someone
who is now, or soon will be, a Medicare beneficiary? If covered by Medicare,
a patient does not ‘join’ an ACO. The doctor, or other care-giver,
or hospital or other facility joins an ACO, not the beneficiary. Care
givers who join an ACO must notify their patients from the recent past
of their participation in an ACO. Medicare beneficiaries may decline to
have any of their protected information shared within the ACO; additionally
they can opt out entirely and choose to receive their care from another
provider if they do not wish to engage with the ACO.
ACO’s are part of a new concept that is reshaping health care—that
of population health management. The intent is to improve health for everyone.
This is a tall order and ACOs will not be able to do it on their own.
Many issues need to be addressed to achieve these aims. ACO’s, which
organize and reward care-givers to work together coordinating care, improve
health outcomes and enhance access to services at a lower overall cost,
can help to improve our health system. This won’t come easily, nor
soon…but it must come if the US is to reduce the rate of growth
of health expenditures .