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Medical Providers Show Interest in ACOs but Analysts Warn of Complexities

By Rebecca Adams, CQ HealthBeat Associate Editor

December 9, 2010 -- A new model of coordinating patients' medical care known as an "accountable care organization" (ACO) is receiving a lot of interest as Medicare officials work on a proposed rule that will be released in January. But analysts with Avalere Health cautioned that it will not be easy for providers to join together to create an ACO network.

ACOs are groups of doctors, hospitals, and other caregivers that work together to improve the quality and efficiency of care. Under the health care law (PL 111-148, PL 111-152), the Centers for Medicare and Medicaid Services will start its version of an ACO program in 2012, which will build on private-sector partnerships that have already launched. CMS officials are expected to allow providers to keep some of the savings that they generate by coordinating more closely together, if there are any savings.

"There's a lot of momentum for ACOs," said Avalere Senior Vice President Erik Johnson as part of a webinar for clients. But he said that setting one up is a "highly uncertain bet for most providers to contemplate." He thought about dubbing his seminar "ACOs: Even Harder than You Think."

"A lot remains unknown about what it will take to be an ACO" under federal rules, said Avalere Director Holly Wittenberg.

Johnson said one key component that providers should consider is how advanced their electronic health records systems are and whether those systems are able to transmit patient data to other hospitals, physicians or other providers. The ability to share records electronically is important because providers don't have the time to sift through lengthy paper records or wait for faxes to deliver information about a patient that is being cared for by several different doctors.

Health IT "is in many ways the linchpin" that will determine whether an ACO is successful, said Johnson.

Wittenberg said that the ACO model is not dramatically different than that of managed care health plans in the 1990s but said that the environment is different now. One difference is that providers will be the central decision makers in an ACO that drive what type of care patients get, not insurance companies.

Seniors also would not be required to get medical services from the providers who are in the ACO that the beneficiaries are enrolled in. They could choose to see other doctors if they want.

However, Johnson emphasized that there are a number of legal and regulatory questions that still have to be decided about how ACOs will operate. Federal officials have not yet decided whether to relax anti-fraud laws and legislation banning physicians from making referrals to a hospital or another institution in which a doctor has a financial relationship.

If providers decide to try to establish an ACO, Johnson said, it will be an "extremely difficult journey and long journey for most providers to get into."

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