accountable care organizations


Jumpstarting Entitlement Reform

Replace Obamacare's Flawed Medicare ACOs with a Better Model

If the White House and Congress want to make a serious effort at entitlement reform, they should begin by bringing more consumer choice to Medicare, which could be done by replacing Obamacare's Medicare accountable care organizations (ACOs) with a model that provides more consumer choice, as I explain in a new column at e21.

There are far better ways to encourage the spread of high-quality integrated care networks in Medicare.  The fastest, surest way would be to create a level competitive playing field with Medicare’s dominant FFS insurance system. This is the premise of the “premium support” model of Medicare reform. Under premium support, private insurance options—the MA plans of today, plus whatever new models may emerge—would compete directly with the government-administered FFS option on a regional basis, and the beneficiaries would select their coverage from the competing plans. Importantly, the government’s contribution to coverage would not increase with higher priced insurance.  That means the beneficiaries would have to pay more for expensive plans.  The result would be strong incentives for enrollment in options that offer high value at reasonable cost -- exactly what well-run integrated systems of care could offer.

You can read the rest of the column here, and for more on Medicare ACOs,  you can watch this AEI video where I explain what they are and why they won't work as defenders of the Affordable Care Act expect them to.

posted by James C. Capretta | 2:14 pm
Tags: accountable care organizations, Medicare reform
File As: Health Care

Reforming Medicare Integrated Care

One of the core provisions for “bending the cost curve down” contained in the Patient Protection and Affordable Care Act (PPACA) are the Medicare accountable care organizations (ACO), which are intended to serve as integrated health plans that will be able to deliver health care more efficiently than the current Medicare fee for service model. But, as I argue in a new AEI research paper, these ACOs do not allow for genuine consumer choice, and because they continue to rely on the fee for service payment model, they are unlikely to deliver on the health care savings that they are supposed to provide.

Private-sector efforts to build high-performing health systems around the country are making real progress in some cases and should be given the room they need to succeed. But this is not the same as saying the ACO program under the PPACA is a success or that it will be successful down the road, which is very unlikely to be the case.

Fortunately, the shortcomings of the ACO model in the PPACA need not be the end of the story. It remains important to encourage the development of more integrated and cost-effective care within Medicare. And that goal can be achieved by replacing the flawed ACO model of the PPACA with a more workable approach based on incentivizing the formation of high-quality plans and on allowing the beneficiaries to share in the cost savings such plans would produce.

The rest of the paper can be read online here.

posted by James C. Capretta | 9:53 am
Tags: Medicare, accountable care organizations, managed care
File As: Health Care