4 ways states can take advantage of ACOs' rewards

State policymakers can take several steps to take advantage of accountable care organizations' (ACOs) benefits while mitigating their associated financial risk, according to a new report.

Researchers from the University of California, Berkeley's Nicholas C. Petris Center on Health Care Markets and Consumer Welfare, School of Public Health, analyzed existing literature and four case studies and identified seven actions policymakers must take to balance the benefits of ACOs with minimal risk. Four of these steps include:

  • Promote integrated care: Integrated care through the ACO model improves coordination and communication, and also provides incentives for continuity of care. Some states, such as California and New York, have laws against general business corporations practicing medicine, creating a barrier to full integration, in which case the report recommends lawmakers allow exemptions for ACOs.
  • Encourage alternative payment methodologies: APMs are a major priority for the healthcare industry ever since the Department of Health and Human Services announced new rules that create incentives for the transition to value-based care, but anti-kickback laws have been a major obstacle. Although the Centers for Medicare & Medicaid Services has established waivers for federal self-referral laws protecting the Medicare Shared Savings Program, policymakers must address similar barriers at the state level, according to the report.
  • Make sure providers assume appropriate, responsible risk levels: Providers taking on levels of risk beyond their means can threaten their solvency, according to the report, and they should find a level of risk assumption that complements their ability to assume and absorb that risk.
  • Encourage cost and quality transparency: Publicly reporting data on costs and quality performance can create incentives to reduce costs and improve quality, according to the report, and many states have already established all-claims payer databases. Research has found transparency in performance data improves outcomes.

All of the policy goals contain inherent tradeoffs, the report notes, such as the risk of anticompetitive behavior that comes with clinical and financial integration even as the integration improves quality or savings. "States must consider and balance these goals when pursuing state action around ACOs," the researchers state.

To learn more:
- read the full report (.pdf)