Accountable Care Organization/Global Payments Hand in Glove–Explanation

Nice clear explanation of accountable care and global payments:

  It is widely acknowledged that continued growth in health care spending is threatening the viability of the U.S. health care system. Although there are no clear comprehensive solutions to this problem, most observers see payment reform as the next best hope for reining in out-of-control costs. Our current fee-for-service payment system provides incentives to physicians to increase the delivery of services, which results in excessive utilization. Moreover, neither individual physicians nor the patients receiving the services bear the brunt of these utilization decisions. Rather, they’re reflected in ever-rising health insurance premiums or tax-financed government expenditures shared by all. Many observers are therefore calling for fundamental redesign of the ways in which physicians and hospitals are compensated for the care they provide. Most options call for bundling payments to physicians; specific approaches range from prospective payments for discrete episodes of care (e.g., coronary-artery bypass surgery) to global payment or risk-based models of care.


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. 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.

Read the article to understand the ACO’s and our global payment future.

Medicynical Note:  What’s missing from these interventions is control of the constant upward pressure on health care costs from suppliers, often with patent protected monopolies. 

It’s hard to imagine a single diagnostic test costing thousands, single drugs of any sort, much less ones of questionable efficacy, costing more the average and median family income for a year.  Yet that is the reality in our current non-system.  Until these excessive and irrational cost issues are addressed the system will continue to fail.  Health reform is a start but reining in profit expectations at all levels and patent reform are additional needs. 

But, always a but, with our Congress in the pay of medical industrial complex real cost containment seems a long shot.

One response to “Accountable Care Organization/Global Payments Hand in Glove–Explanation

  1. Thanks for comment, found it while monitoring alerts for ACOs.

    Meanwhile, let me call to your attention, and our weekly Internet radio broadcast, ‘This Week in Oncology’, see:

    Very cool that you’re a medical oncologist: 1. active in social media, and therefore consider this a reaching out to connect like minds; and 2. have an MPH perspective which is a key insight as we look forward and design a system that can actually work.

    Might you be interested in a chat on the radio show with Dr. Just, aka @chemosabe1 on Twitter? If so, please send a note to chemosabe1(at)yahoo(dot)com, @ reply on Twitter.


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