Will ACOs Lower Costs?

An important part of the health care reform law is the promotion of Accountable Care Organizations (ACOs) – programs that enable health care providers to earn financial rewards when they achieve goals for high quality, cost-efficient care.

The Medicare ACO program will begin this year and surveys show more than 150 additional ACOs currently being developed by physician groups, health plans and hospital systems. In contrast to HMOs or PPOs that exploded in the 80’s and 90’s, ACOs are comprised of providers and not members. When a doctor or physician group joins an ACO, their patients are attributed to that ACO even though they are not restricted from using other providers. The ACO can earn a share of the savings that results from collaborative efforts to deliver cost-efficient care. In the case of Medicare, this means keeping quality high while achieving “lower than predicted” overall costs.

While many see ACOs as nothing more than another attempt to manage care without measurably improving it, others believe the ACO model is based on the right premise – transparency, collaboration and a commitment to eliminating waste. One thing that seems encouraging is that provider interest in ACOs is extremely high. This just might be an indication that those involved are truly dedicated to earning financial rewards by achieving better outcomes and reducing expenditures.

To view other articles from the SIP Spring Newsletter, please click here.

In cooperation with NAEBA

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