Medicare Medicare Advantage Supply of Medical Services

Do you support ACOs?

Do you support Accountable Care Organizations?  Many policymakers think they are a great idea.  Why?  If ACOs better integrate care coordination between a variety of physician specialists and other providers, ACOs can increase the efficiency of the health care system.  Improving quality and reducing cost sounds like a great idea.

To implement these integrated care settings in practice, however, Michael Cannon notes that potential ACOs would be funded through savings they provide to Medicare.  This also sound pretty attractive.

If you are a provider, however, ACOs may be couched in a different light: lower reimbursement levels.  If the government believes ACOs can improve efficiency, Medicare can pay providers less for the same services (and ostensibly maintain the same quality level).

Robert Laszewski writes, “Here’s a flash for the policy wonks pushing ACOs: They only work if the provider gets paid less for the same patient population. Why would they be dumb enough to voluntarily accept that outcome?”

In the short-run, the answer is no.  As I’ve mentioned in the past, however, in the long-run, ACOs can increase provider market share and give Medicare less bargaining power in the long-run.

Medicare’s short-run push to coordinate care and reduce cost may result in a more concentrated fee-for-service marketplace and higher Medicare cost in the long-run.  Medicare may want to stick with it’s existing form of ACOs: Medicare Advantage plans.

1 Comment

  1. If the foundation of ACOs are grounded in more informed patient/provider relations than we might be onto something. Encouraging patients to take a larger part in the care of their health could lead to lower costs and less use of services. Patients need to know what to ask and feel supported when questioning their docs. I found this helpful:

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