Rhapsody Health Solutions Team

Are ACOs Just 21st Century HMOs?

It’s impossible to avoid the ongoing debate over the changes that Accountable Care Organizations (ACOs) will bring to the industry. Much like the political rancor over the Affordable Care Act (aka “Obamacare”) that first mentioned ACOs, the new model of care has hopeful supporters and a number of detractors within the health care industry.

An ACO is a network of health care providers and hospitals that share responsibility for providing care to patients. According to the Centers for Medicare and Medicaid Services, an ACO “agrees to be accountable for the quality, cost and overall care of Medicare beneficiaries who are enrolled in the traditional fee-for-service program who are assigned to it.”

The rationale behind this new model of care is that the current delivery of health care in the United States is fragmented. It’s not unusual for a patient to visit different hospitals, doctors and other health care organizations for the same medical condition, with very little or no communication between the caregivers. As a result, there often are too many expensive tests and diagnostic procedures performed, repeated procedures and a lack of follow-up with the patient.

The government is encouraging health organizations to participate in the ACO model of care by financially rewarding caregivers for meeting certain quality of care benchmarks that include fewer repeat visits or readmissions and patient adherence to standard, preventative care visits, such as an annual physical or a mammogram.

Supporters argue that the introduction of ACOs will bring long-overdue change to patient care, shifting the focus back to the quality of care the patient receives. Health care providers will be encouraged to coordinate care throughout the ACO to the benefit of the patient’s health, otherwise they won’t qualify for certain rewards that are given if quality benchmarks are achieved.

The detractors of ACOs believe they are a utopian big-government dream destined to fail. Some even argue that ACOs are simply the 21st Century version of HMOs – which were almost universally disliked by patients – that will produce lower-quality care with fewer choices and higher prices.

In the 1990s, HMOs, or health maintenance organizations, were common health insurance plans that restricted patients to receive care from designated in-network physicians and refused to pay for procedures they deemed unnecessary. HMOs still exist today, but aren’t nearly as common; however, the near universal dislike of HMOs led to insurance plans easing the restrictions they place on patients in regards to treatment and choice of physician.
There are key differences between the proposed ACO model of care and the care patients received from HMOs in the 1990s. The main difference is in the accountability of care – in an ACO, health care providers for the first time will be rewarding for providing care based on their success rate, not based on the number of procedures or tests that they can perform (i.e., fee for service).

Caregivers within an ACO will have the flexibility to contract with other affiliated ACO caregivers or organizations without the reliance on an HMO insurance representative who were frequently accused of making care decisions that were not in the patient’s best interest.

Another key difference between the two models is that patients will not initially realize they are receiving care in an ACO. HMOs are insurance plans, so patients were acutely aware of their existence, from the limited choice of physicians they were given to the insurance cards they were required to present for payment. Patients in an ACO can choose the physician of their choice, and that physician will refer patients to other caregivers within the large network of affiliated ACO organizations. Patients may only become aware of the ACO after care is complete and their provider asks for permission to allow Medicare to share their claims data with the ACO for shared savings determination.

Regardless of how the Supreme Court will rule on the Affordable Care Act next month, health care organizations have been taking huge steps, at significant financial cost, to qualify to become an ACO – such as implementing electronic health records and creating seamless interoperability between affiliated organizations. Forward-thinking organizations are determined to remain profitable and at the forefront of patient care, regardless of the requirements.

There is little doubt that ACOs will alter the health care landscape by changing the way providers measure success. Patient care and preventative health measures will become the primary focus, putting the current fee-for-service model in the past, alongside HMOs.

Will the ACO model be successful? A large component of their success depends on their patient population proactively taking care of their health – a feat that would truly be a welcome medical revolution.

For more information on ACOs, see:

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