• Moving Forward with Accountable Care

    ACOs are the right direction for health care, says a respected health policy expert. But the federal government’s ACO approach needs to be revamped to ensure everyone is pointed toward the greater good.


    Decades of watching America’s healthcare system evolve have given Paul Ginsburg, PhD, a renowned economist and health policy analyst, ideas about what should happen to promote a healthier system.

    Ginsburg would like to see the movement toward value-based payment (including bundled payments) accelerate, diminishing the role that fee-for-service plays in health care.

    Listen to a related audio clip on Ginsburg’s thoughts on the popularity of bundled payment and medical homes.

    “I think there’s better than a 50/50 chance that this will happen,” he says. “But there is more work to do to get there, particularly on the part of Medicare.”

    Payment reform is one of Ginsburg’s top interests in his new role at the University of Southern California as Norman Topping Chair in Medicine and Public Policy at the Leonard D. Schaeffer Center for Health Policy and Economics.

    During the previous two decades, he founded and led the Center for Studying Health System Change, which conducted research to help policymakers understand changes in the organization, financing, and delivery of health care. Before that, he served as the founding executive director of the Physician Payment Review Commission, which later became the Medicare Payment Advisory Commission.

    Accountable Care, Version 2

    In December, the Centers for Medicare & Medicaid Services (CMS) proposed changes to the Shared Savings Program for accountable care organizations (ACOs). Among other tings, CMS seeks to encourage ACOs to take on more performance-based risk by making the lead-time for accepting downside financial risk longer.

    In light of mixed performance of ACOs in the Shared Savings Program so far, Ginsburg said the proposal will likely keep some from dropping out entirely. But he thinks many ACO participants believe the government's risk/reward formula makes it too difficult to succeed.

    "I think a lot of the reluctance to accept two-sided risk comes from not being confident in the specifics of a model that's really going to work," he says. "On a one-sided risk basis, you could think, 'Well, we have to do this at some point in the future. Let's start learning how to do it. Maybe we'll get our savings, maybe we won't.'"

    Thus, Ginsburg thinks the government's proposed rule does not go far enough to make the Shared Savings Program attractive to would-be participants.

    "I see it very much as a Band-Aid and would like to see some additional efforts to make the program more viable," he says.

    A fundamental problem with Medicare’s accountable care organization (ACO) programs, in Ginsburg’s view, is that each organization’s performance is benchmarked to its historical performance rather than to the average performance of all providers in the community. “To have a sustainable business model, providers need to be rewarded because they are high performers, rather than because they have improved,” he says.

    By benchmarking against historical performance, Medicare encourages high-cost providers to participate in the ACO program because they are likely to show year-over-year improvement. But organizations that are relatively efficient find it more difficult to lower their costs sufficiently to earn shared savings, which makes participation in the government’s ACO program less attractive for high-value organizations.

    In its December proposed rule, CMS asked for suggestions on how its benchmarking strategy might be changed. Ginsburg would like to see a specific proposal.

    "It's a very positive sign that CMS opened discussion about the benchmarking approach, but it's not like other areas where they said, 'Here's what we want to do. Please comment on it,'" he says. "In the benchmark area, they just said, 'Well, we're thinking about some changes, what would you like to see?'"

    The fix, in Ginsburg’s opinion, is making ACO participation more financially attractive than Medicare fee-for-service. “I don’t think we will ever require ACO participation, but we could get to a point where, in the aggregate, providers in ACOs get higher rates per service than those in fee-for-service,” he says. “Once you start having incentives to contract with Medicare as an ACO, then the government can start introducing benchmarks that reflect the performance of the providers in a given community.”

    Another problem with the current iteration of Medicare ACOs is the retrospective attribution of beneficiaries. “Organizations would benefit a great deal by knowing in advance who is going to be attributed to their ACO so they can reach out to them to improve the management of chronic diseases,” he says. “Without that, the ability to engage beneficiaries is just not there.”

    Beneficiary engagement would be strengthened further by another significant change to the government’s current ACO model: Medicare patients need to be rewarded for choosing to receive as much care as possible within an ACO’s network of providers. “This involves beneficiaries actually choosing ACOs,” Ginsburg says. “Now that’s a heavy lift, and I’m not sure what it will take to get Congress to do that.”

    All in This Together

    Meanwhile, health systems have their own heavy lifting to do. Most systems need to make significant changes in the way they deliver care and figure out how to work with physicians to succeed in ACO contracts. “The hospital world seems to be very much supportive of this direction, which will ultimately be beneficial, but one should not discount how challenging this will be during the transition,” he says.

    Paul B. Ginsburg, PhD, is Norman Topping Chair in Medicine and Public Policy, Leonard D. Schaeffer Center for Health Policy and Economics, University of Southern California, Los Angeles.

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