Another Affordable Care Act reform is in the offing. Since its passage in 2010, the Obama administration has been designing new underwriting experiments to develop alternate payment methods.

The goal? Better care and less expensive. In 2104, 20% of Medicare spending went to models such as accountable care organization or ACOs. The premise of an ACO is doctors and others band together for patient care. Any savings they pass on to Medicare comes back to them in the favor of bonuses.

Currently, the United States has 424 ACOs, and 105 hospitals that accept bundled payments. It works in a straightforward manner. Medicare gives the doctor/hospital/ACO a lump sum for each patient, and that is supposed to cover the treatment and any follow-up care.

Federal Targets

The alternative payment procedure is destined to remove the fee-for-service model and replace it with a quality of care component. HHS Secretary Sylvia Burwell targets about 30% of Medicare spending to be funneled through these programs by the end of Obama’s term. By 2018, that figure should stretch to 50 %.

By 2018, the Obama administration wants 90% of Medicare spending to be linked to some form of quality measurement. This will be attained in a bonus structure for this type of care, and increased penalties for strictly fee-for-service charges.

“For the first time we’re actually going to set clear goals and establish a clear timeline for moving from volume to value in the Medicare system,” Burwell said at an announcement at the department’s headquarters, where she was joined by leading physicians and leaders from the insurance and hospital industries. “So today what we want to do is measure our progress and we want to hold ourselves in the federal government accountable.”

ACO Pushback

Those that have embraced the model have seen a quarter of them save enough to earn bonuses. Critics are quick to pounce of the arbitrary models and the dozens of benchmarks they have to hit.

Medicare is also threatening to demand reimbursements from those organizations that do not meet the benchmarks. Considering the cost of keeping a baby boomer alive through a multitude of chronic conditions, expect the pushback on this to increase.

Instead of focusing on money, Medicare should push for quality of outcome. The ACO is an effective health desert. How can they expect to save money when their patient set is not remotely proactive about their own healthcare.

Yes, there needs to be reform. But, let’s do it in a semi-intelligent way. Not something that sounds like a road to rationing health care so ACOs can meet their bonus.

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