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There's one major problem with the HHS plan to speed up value-based performance

ACOs play a starring role, but their performance may be lacking

Last month, the Department of Health and Human Services (HHS) announced that it would fundamentally reform how it pays providers for treating Medicare patients in the coming years.

The announcement is a positive step for the industry. For starters, it speeds up the transition from fee-for-service to pay-for-performance, forcing Medicare to commit to a payment method that focuses on the quality of care delivered, and not the quantity. However, there is one potential flaw: The plan relies on the success of accountable care organizations (ACOs)--success that has yet to be achieved fully, reported the Huffington Post.

Here are some issues with ACOs, as noted in the article:

  • The quality of care varies among ACOs, which causes the cost of care to vary as well. This is expected in a fee-for-service model, but not one based on value.
  • Pioneer ACOs take on downside risk, since they are paid less if they don't succeed. Out of the 32 original pioneer ACOs, only 19 remain.
  • While ACOs, in theory, are a good idea, they may force massive mergers and acquisitions, causing these newer, larger systems to dominate major markets around the country.

It's unclear, according to the article, what will happen should ACOs become the dominating presence in the market. What is clear, based on past trends, is that payers and providers alike stand to lose negotiating power if giant health systems dominate the markets. When this happens, quality is placed on the back burner while entities focus on the cost of care.

With some alterations to ACOs, it's possible the program could succeed. Currently, the Centers for Medicare & Medicaid Services' (CMS) benchmarking methodology is based on historical data, as noted in GovHealthIT. Because ACOs develop their own benchmarking methods, which are based on local experiences, CMS' way of doing things is a bit outdated. Perhaps to ensure the success of the program, CMS should address these benchmarking-issues, suggested GovHealthIT.

For more:
- here's the Huffington Post article
- here's the GovHealthIT piece

Related Articles:
New pay-for-performance approach could motivate more docs to participate
Most payers, providers already shifting to value-based care
Feds speed plans for value-based payments
Pioneer ACO program loses three more participants