Building An ACO—What Services Do You Need And How Are Patients & Physicians Impacted?

The definition of an accountable care organization (ACO) involves two elements: organization and payment. First, an ACO is organized as one entity capable of taking both clinical and fiscal responsibility for care. Second, ACOs operate using a payment model centered on a budget target: if the ACO spends less than the budget target, it shares in the savings, while, in some models an ACO that exceeds its budget target might be required to pay more.

ACOs differ from past models like health maintenance organizations (HMOs) and preferred provider organizations (PPOs) in various ways. Most importantly, they are provider, not health plan focused. In ACOs, people are attributed to the model; they do not sign up as in insurance plan. Furthermore, ACOs, unlike insurance plans, do not set premiums, nor do they control benefit design.

In summary, patients will not at all be aware of transactions, and the overall effectiveness for cost containment are highly in doubt.

The strongest case for the ACO model may be that it allows organizations to capture the efficiencies if they can achieve them and thus succeed financially with lower revenue growth.Thus while it is not certain that organizations can make this transformative turnaround, the alternative looks particularly bad.

Blogger's note:

This post is part of a Health Affairs Blog symposium stemming from “The New Health Care Industry: Integration, Consolidation, Competition in the Wake of the Affordable Care Act,” a conference held recently at Yale Law School’s Solomon Center for Health Law and Policy. Links to all posts in the symposium will be added to Abbe Gluck’s introductory post as they appear, and you can access a full list of symposium pieces here or by clicking on the “Yale Health Care Ind

New Health Care Symposium: Building An ACO—What Services Do You Need And How Are Physicians Impacted?