BusinessHealth Reform

Panacea Dreamin’

2 Mins read

When ObamaCare was being written into law, Congress was faced with a dilemma — “with all these newly insured people, how can we keep care affordable?” It came up with a magical solution — “We will create a brand new kind of organization to deliver care. One that will lower costs, increase access, and improve quality all at the same time! Never mind that such an organization doesn’t exist, we will pass a law requiring it to exist.” Access, cost, and quality have long been known as the three-legged stool of health reform. It is hard to improve one without worsening the others. So trade-offs must be made. But not this time. Congress decided it no longer had to make trade-offs. It could have its cake and eat it, too, by creating (drum roll)…tah daaaaah!…ACCOUNTABLE CARE ORGANIZATIONS (ACOs)!!!! This is like passing a law forbidding it to snow in the District of Columbia, since snow is such a chronic problem. It is messy, it is costly to remove, and it’s a danger to public health as people slip on the ice and hit their heads. It really should be banned. But only from DC, since so many Members of Congress enjoy skiing, and pictures of snowy small towns make for pretty Holiday (not Christmas) cards. Unfortunately, the little bit of evidence that exists is not much more encouraging than a law banning snow. An article by Trent Haywood and Keith Kossel in the New England Journal of Medicine notes:

With this rapid movement toward ACOs, one would expect that the previous government demonstration of the model would have produced promising results that warranted its rapid expansion. Our analysis of the results from the demonstration suggests otherwise.

They discuss a five-year demonstration project conducted by Medicare known as the “Physician Group Practice (PGP) Demonstration.” The program was confined to:

… a select group of large physician group practices with the necessary experience, infrastructure, and financial strength (participants invested $1.7 million, on average, in the first year alone) to succeed in the demonstration.

With those resources, this group should have had a “high likelihood” of positive results,” according to the authors. Instead, they did not even get their initial investment back. The authors conclude:

The high up-front investments make the model a poor fit for most physician group practices; the time frame in which one can expect a reasonable return on the initial investment is more than 5 years; and even the majority of large, experienced, integrated physician group practices could not recover their initial investment within the first 3 years.

Maybe that is why the regulators are having a devil of a time coming up with appropriate regulations. In AIS’ Health Reform Week Judy Packer Tursman reports that “after months of delay” the draft rules were expected some time in March. But the rest of the article is not hopeful as the draft rules bounce back and forth between CMS, OMB, FTC, DOJ, and many other agencies. Two CMS spokesmen are quoted as saying, “We don’t expect the reg out any time soon,” and “I don’t know when it is coming out. I can’t give you any idea.” Another unnamed source says, “They’re still struggling over big issues…. It’s a mess.” Of course, these ACOs are supposed to go into effect on January 1, 2012, and the regulations will have to be published for public comment for 60 days once the proposed regulations come out. And the prospect of a government shutdown adds to the confusion. Maybe Congress should have stuck to banishing snow.

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