Former CMS chief: Quick shift to global payments will make ACOs work


"Running an [accountable care organization] is much harder than it looks," Leonard Schaeffer, founding chairman and CEO of WellPoint and former Medicare and Medicaid administrator, said Thursday at the ACO Summit in the District of Columbia.

During his time at Group Health Cooperative in Seattle, Schaeffer (pictured), now a senior advisor at TPG Capital, learned several lessons about ACO implementation. First, organizations need cultural alignment among the people delivering the care as well those receiving it. At Group Health, an integrated healthcare systems, such alignment already existed, Schaeffer noted.

Another ACO necessity is a data analysis and gathering capability. Just having the data won't do much to control cost and quality. "You need to translate it into data for decision-making, make decisions and enforce those decisions," Schaeffer said. Physician leaders and managers can enforce accountable care decisions by helping colleagues understand their obligation is to the patient and to do the service that is lower in cost and equal quality.

Even with data analytics to justify and enforce high-quality, low-cost decisions, ACO implementation won't be easy because organizations are dealing with a flawed law, Schaeffer noted. The Affordable Care Act's three big flaws include retroactive assignment of members, insufficient financial incentives to take required risks and the continuation of fee-for-service reimbursement. The likelihood of ACOs succeeding depends on how quickly the industry can move away from FFS to global payments.

"No matter how much lipstick you put on the fee for service, you still have 'the more you do the more you get paid,'" he told the audience.

The private sector is leading the charge away from fee-for-service, as private companies continue to increase their interest in global payment models. Moreover, their growing interest can make it politically acceptable for the government to get there as well, Schaeffer noted. For instance, private insurers offering plans through the exchanges have found tighter networks to be effective. "If you pick doctors and hospitals well you can get without a doubt higher quality care at a much lower price," Schaeffer said.

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