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Potential Minefields On The Path Toward ACO’s

Bruce Landon, a primary care doctor at Beth Israel Deaconess Medical Center, considers the future of ACO's

Bruce Landon, an internal medicine doctor at Beth Israel Deaconess Medical Center, offers a smart analysis of ACO’s (accountable care organizations) — their potential for both good and bad — in this week’s New England Journal of Medicine. The key, says Landon, who is also a professor of health care policy at Harvard Medical School, is how, exactly, organizations choose to divide their global budgets, and whether they plow money back into primary care to shore up the foundations of a prevention-focused system, or whether monies continue to flow, as they have, toward a fee-for-service, specialist-driven arrangement.

Landon writes:

Conceptually, global payment represents an important opportunity for changing the perverse incentives inherent in our current fee-for-service system. To be successful, however, ACOs must pass these incentives along to their member physicians, who continue to be responsible for most utilization decisions. Although organizations can implement various managerial strategies to influence physicians’ decision making (e.g., radiology decision support and prior authorization), ACOs are unlikely to reduce the rate of increase in health care spending without some essential changes in the behavior of member physicians — and therein lies the rub. [My bold]

The fundamental questions become how ACOs will choose to divide their global budgets and how their physicians and other service providers will be reimbursed. Thus, this system for determining who has earned what portion of payments — keeping score — is likely to be crucially important to the success of these new models of care. Continue reading