Doubts surface over whether ACOs really will cut costs

Accountable care organizations are supposed to help cut costs by operating more efficiently. But will they really save money? That's a question some critics are asking, the Wall Street Journal reports.

New ACOs may risk raising costs, especially as hospitals swell through mergers, by adding doctor practices or hiring more physicians to coordinate care. Hospitals often are better paid for outpatient services and imaging than doctor-owned clinics.

Insurers worry that larger hospital/doctor groups would have the market clout to squeeze higher fees out of private payers. "If ACOs are a recipe for more consolidation and price increases, that will take us in the wrong direction," Karen Ignagni, chief executive of America's Health Insurance Plans, the health insurer's lobby group, told WSJ.

According to the healthcare reform law, if an ACO cuts costs for its Medicare patients by a certain percentage below a benchmark, providers can expect to receive extra payments drawn from the savings. It's all part of a plan to rein in Medicare growth in spending.

Some healthcare organizations already are getting set to position themselves as ACOs. The Billings (Mont.) Clinic, a nonprofit that includes a hospital, has already cut hospital admissions for heart failure patients, saving Medicare more than $3 million over three years.

Other organizations, like Fairview Health Services--a Minneapolis-based nonprofit system--are incorporating ACO-style payment structures or incentives in their contracts with private payers. Fairview aims to cut its total cost of care for ACO patients by between 5 and 20 percent. To lower costs, patients who want an appointment with a doctor may instead get a phone consultation or an appointment with a nurse practitioner. Both are cheaper options that traditional payment models don't encourage because insurers pay more for doctors' work.

To learn more:
- read the Wall Street Journal story

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