By John Reichard, CQ HealthBeat Editor
July 16, 2010 -- In some respects, the health care overhaul law is getting a bad rap when critics in Congress say it fails to address rising health care costs.
Not only does the law launch experiments to test possible solutions to what everyone acknowledges is a complex problem—it also gives the Health and Human Services secretary the power to push a redesign of how health care is delivered in the United States.
Case in point: the secretary's new authority to contract widely starting in 2012 with entities called "accountable care organizations"—groups of doctors, hospitals, and other caregivers that work together to improve the quality and efficiency of care.
Such an organization that contracts with Medicare, for example, will agree to take charge of the care of at least 5,000 beneficiaries. It will deliver a full spectrum of services, such as doctors, hospitals and skilled nursing care. And it's supposed to do it in a highly organized and coordinated way to better serve patients and lower costs.
Democrats see the groups as a way to begin retooling the payment and organization of health care and possibly to "bend down the curve" in health care spending.
So, too, do Republicans who are otherwise hostile to the law. Chief among them: House members such as Charles Boustany Jr. of Louisiana and Michael C. Burgess of Texas, both physicians.
Whether the organizations can actually live up to the hype right now surrounding their creation is questionable. But the bipartisan interest in the concept suggests that it's one approach to cost control that may get a thorough test—even if Republican gains in Congress lead to major changes in the law.
The idea behind the groups is to begin moving away from financial incentives that drive up health care spending by paying doctors and hospitals more for providing each additional service and delivering more complicated types of care.
The law aims to shift that dynamic by creating a "shared savings program" that charts expected spending growth for a particular mix of Medicare patients served by one of the organizations.
Doctors, hospitals and other providers and suppliers in the organization are supposed to coordinate to deliver good preventive care, avoid duplicative tests and services and assure treatment in the most cost-effective setting.
The theory is that by doing so, the groups can keep spending below the projected level. If they meet quality performance standards in the process, they will be rewarded by getting to keep some of the savings.
In May, Boustany took a break from the rancor surrounding the overhaul by showing up at a Capitol Hill forum regarding the organizations, where he said nice things about the concept and about another supporter, Sen. Max Baucus, D-Mont.
"I admire what you attempted to do," Boustany told Baucus, referring to his efforts to negotiate Republican support for the overhaul. Boustany also praised the sponsor of the forum, the hospital coalition Premier Inc., for launching 19 accountable care organizations covering 1.2 million patients in 15 states. "We will learn a lot from this initiative," he said. Baucus, too, gave a big pat on the back to the coalition backing the new care organizations. "You are on the cutting edge of the most important part of health care reform," he said.
Adding to the sense of bipartisanship surrounding the care organizations is the leadership of Mark McClellan, who ran Medicare and Medicaid for President George W. Bush. Now at the Brookings Institution, McClellan, together with Dartmouth researcher Elliott Fisher, has established a "learning network" of some 100 provider and payer groups testing the organizations.
Enthusiasm for the groups leaves some analysts feeling a little queasy, however. They wonder whether they will produce the efficiencies and cost savings promised. Paul Ginsburg, president of the Center for Studying Health System Change, a Washington, D.C.-based research group, notes that the organizations will still operate in a "fee-for-service" system that rewards providers for doing more.
And financial rewards in the shared savings programs may simply be too small for hospitals to justify the lost revenue from reducing admissions, he said. Robert Berenson, research fellow at the Urban Institute, noted that while collaboration among providers can improve clinical efficiency, it also can give such groups more leverage to demand higher fees and wipe out savings.
McClellan acknowledged the concerns but sees the shared savings program as a way to begin spurring providers to better track costs and treatment outcomes—and, increasingly, to be paid on that basis rather than on volume of services. "It's very hard to do anything radical" in health care, he said.
Doubts aside, however, Berenson and Ginsburg see value in testing the care groups. On that score, there's bipartisan harmony. "Given the cost concerns facing Medicare and of course all aspects of health care, we cannot afford to sit on the sidelines and not act on trying to find out what those best practices are" in provider collaboration, Boustany told the Premier forum.