Health Care Reform Bulletin #6

From: Jim Gallic
Sent: Thursday, April 05, 2012 7:13 PM
Subject: Health Care Reform Bulletin #6

Today we tackle Accountable Care Organizations or ACOs!

What is an ACO?

An Accountable Care Organization or an ACO is a network of doctors and hospitals that shares responsibility for providing care to patients. In the new law, an ACO would agree to manage all of the health care needs of a minimum of 5,000 Medicare beneficiaries for at least three years. Kaiser Family Foundation has a really well written overview but a recap of the information is below.

How does an ACO work?

Accountable Care Organizations work by integrating clinics, hospitals, doctors and in-home care into a single service for the employee. This model was adopted from the original HMO (Health Maintenance Organization) structure which provides in-network access for all of your medical needs.




How is an ACO different from an HMO?

ACOs differ from HMOs in two primary areas.

1.       HMOs are run by insurance companies where ACOs are run by the provider networks

2.       ACOs are paid on a Bundled Payment schedule versus a standard Fee for Services arrangement

What is a bundled payment?

Bundled payments and other similar programs are structured around outcome based results. Currently, providers are incensed to have their patients return to the hospital or doctors office because they are paid for each service rendered. There is no incentive for the doctor or hospital to get it right the first time. Instead, they are paid more if it takes three or four attempts.

Bundled payments and other outcome based programs are structured in a way that provides a payment to the provider based on the success rate of the service. If the patient requires multiple visits to the hospital because of poor diagnosis or care, the provider will have to absorb that cost. The insurance company will pay the provider a portion of the money up front and then hold the balance until the patient has meet certain requirements that demonstrate they are healed fully.

You can learn more about Bundled Payments at the CMS website located here.

Have a question, thought or insight? Send me an email at jgallic@businessolver.com and I will use it help educate everyone!