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Accountable Care Organizations, Term Paper Example

Pages: 3

Words: 889

Term Paper

Accountable care organizations (ACOs) contain features that enable them to control costs by designing a distinct payment model which correlates care delivery with provider reimbursements through an electronic coding system. Importantly, a group of health care providers form the Accountable Care Organization (ACO). This is mandatory if they are to qualify for state benefits from Medicare/ Medicaid clients and federal tax exemptions. Typical payment models used to gather funds in lieu of services rendered to patients include capitation and fee for service. In adapting these approaches they become accountable to both patients and third parties and quality of services are improved while cost is controlled (McClellan et.al, 2010).

Specifically in addressing cost control mechanism Accountable Care Organizations (ACO) have enacted applications of a one-sided/two-sided payment model. In adapting the one sided approach savings are shared among participating providers form two years. In the third year losses are beside savings loses are also shared as well. When the two sided model is utilized Accountable Care Organizations (ACOs) share profits and losses for the entire three years. The maximum sharing rates in one-sided model is 50% while it is 60% in the two-sided once the 2% saving level is achieved. Analysts predict less financial risk form both providers and clients when these models are applied (Keckley & Hoffmann, 2011).

With regards to improving quality of care Accountable Care Organization (ACO) interventions have made applicable five distinct domains for evaluating care quality. These include care coordination; patient/caregiver experience; patient safety; at-risk population/frail elderly health and preventative health. The goal is to reduce costs and improve quality of care within out rationing services which has been a great concern in the recent health care reform strategic policy interventions (Miller, 2009).

Discuss the pros and cons of these three payment methods:

  • Fee-For-Service

Fee-for-service (FFS) describes a payment method whereby each service is coded and paid for individually. As it relates to health care it is believed to offer physicians an incentive to prescribe more treatments for patient/clients. A disadvantage of this method is that patients tend to be offered treatment, which they do not need, but are added because the physician can derive a fee for the service. In this case the emphasis flows away from quality care towards quantity care (Fuchs, 2009).

Importantly it benefits the physician, but raises cost for the individual and insurance coverage they carry. It can be considered a physician dominant payment intervention. Many clients trust their physicians and seldom refuse treatment or diagnostic tests, especially, if they do not have to pay out of pocket. However ultimately, costs are increased and efficiency is compromised since a patient may have to take a test or undergo treatment just for the sake of billing the insurance, which is ridiculous. Integrated care is minimized (Fuchs, 2009).

 Global Payment (i.e., risk-adjusted capitation)

Global payment methods in US health care system is also known as bundled payments; price package; episode-based payment and evidence-based case rate. This method allows for reimbursement of physician fees from a premise of ‘expected costs for clinically-defined episodes of care’ (Miller, 2008, p 1). A precise description of the typology is a junction between fee-for service and capitation (Miller, 2008).

Global payment a system limits unnecessary care as is abused in fee-for service models. When taken in terms of capitation applications global payment systems remove penalties from physicians who care for more critical patients. Analysts have advanced that global payments have eliminated redundancy in healthcare services and improved quality of care. Consequently, it provides transparency in payment matching services while encouraging economies of scale evaluations (Miller, 2008).

However, disadvantages of using this method encompass providers seeking to increase profit avoiding treatment of patients who may not have enough health insurance coverage for maximum reimbursement. In other instances they may make a diagnosis more severe than it really is to invoke an intense reaction to immediate intervention. Situations have been reported whereby physicians offered the lowest possible level of service in cases where reimbursement was uncertain due to prior authorization of care. In limiting access to specialist is another way hospitals may try to maximize profits under the global payment system (Miller, 2008).

(3) Episode-Based Bundled Payment as a principle way of reimbursing ACOs.

As was mentioned in the previous section episode-based bundled payment is a form of global payment, which in principle ensures that patients are not exploited in receiving unnecessary treatment and providers are paid collectively for episodes of care. For example, if a woman has to undergo mastectomy; after coding is applied to service, payment and providers one billing will be executed for the mastectomy surgery and all that encompasses the episode before admission and after. As a provider payment intervention plan this method provides greater transparency for both parties.

References

Fuchs, V. (2009). Eliminating waste’ in health care. Journal of the American Medical Association, 302 (22), 2481–2482.

Keckley, H., & Hoffmann, M. (2011). Accountable Care Organizations: A new model for sustainable innovation. Deloitte Center for Health Solutions.

McClellan M. McKethan, N. Lewis, L. Roski, J., & Fisher, E. (2010). A National Strategy to Put Accountable Care into Practice. Health Aff (Millwood).29 (5), 982-990.

Miller, H. (2009). How to Create Accountable Care Organizations. Center for Healthcare Quality and Payment Reform. Retrieved on May 9th, 2013 from http://www.chqpr.org/downloads/HowtoCreateAccountableCareOrganizations.pdf

Miller, J. (2008). Package pricing: Geisinger’s new model holds the promise of aligning payment with optimal care. Managed Healthcare Executive. Retrieved on May 9th 2013 from http://managedhealthcareexecutive.modernmedicine.com/managed-healthcare-executive/news/package-pricing-geisingers-new-model-holds-promise-aligning-paymen

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