Last month, the U.S. Centers for Medicare and Medicaid Services approved two new accountable care organizations, or ACOs, in Central Florida. This brings the total to three approved organizations, responsible for coordinating the care of 13,500 Central Florida Medicare patients. Three additional local ACOs are also in the works.
By definition, an ACO is an organization formed between health care providers- usually primary care and specialty doctors- who no longer will accept a simple fee from the government for the services they render. Instead of the simple fee from the government, they accept a bundled payment. If they keep the patients healthier and save money, they get to keep some of that cash.
There are arguments that ACOs are the HMOs of the 1990s, simply re-named. If they function properly, they should save the government money, lower the cost of health care, and ultimately save businesses money on health insurance premiums.
The Federal Government, as the nation’s largest health insurer, is shifting its focus to quality not quantity. As does Medicare, so does commercial health insurance. As an example, this means every doctor and hospital that touches a patient during a procedure would no longer bill the government. It also means, for example, if an initial surgery is screwed up, then the hospital must eat the cost of the second surgery.
Most analysts agree that ACOs will either prove or disprove themselves over the next few years. If ACOs keep patients healthy and out of the hospital, the financial net loser in this scenario is the hospital. Even if forming an ACO increases a hospital’s market share, the net result, even with the money the government pays it, would be a reduction in revenue.