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Assessing the ACO Model: Policy Meets Reality

May 18, 2011
From the May 2011 issue of HealthCare Business News magazine

Finally, the PGP demonstration provided little in the way of evidence around how best to handle the issue of patient attribution and the financial risk that poses for participating providers. In the demonstration, Medicare beneficiaries were “assigned” to demonstration participants using a retrospective attribution model based on the patient’s prior usage of primary care physicians. Patients were unaware of their assignment to a demonstration site and retained freedom of provider choice. With no incentives to choose high-quality or efficient providers, or to restrain their use of services, demonstration participants were faced with managing (the cost of) a patient population over which they had minimal control.

While the PGP demonstration proved successful in achieving various ambulatory and chronic care quality targets, the broader implications of the demonstration, particularly in the areas of achieving cost-savings and sharing savings with participating health care organizations, are less clear. Since the participants in the demonstration faced no financial risk if they missed their targets, it begs the question of whether the financial incentives as currently envisioned in the CMS ACO model will be strong enough to change providers’ behavior. If we have learned anything from the PGP demonstration, it is that we have much more to learn about how to simultaneously achieve the overarching goals of access, quality and cost in today’s health care system.

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Keith C. Kosel is senior director, Research, Social Sciences Practices Group at VHA Inc. Prior to coming to VHA he designed and lead disease management programs for Ford, General Motors and Daimler-Chrysler at Blue Cross Blue Shield of Michigan. He holds a PhD in medical sciences from the University of Iowa College of Medicine, a MHSA in medical care organization from the University of Michigan and a MBA in finance from the University of Detroit-Mercy.

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