It will take several years to determine the effectiveness of health care reform legislation signed into law by President Barack Obama in March. It may take even longer to realize the benefits of one particular piece of the reform bill.
Health reform was principally driven by a desire to address three identified problems: (1) expansion of access to health care services; (2) controlling rising costs; and (3) improving quality.
Expansion of access to health care services was addressed in the health reform legislation by such provisions as:
- Individual and employer mandates to obtain health insurance.
- Elimination of pre-existing conditions and lifetime cap limitations on coverage.
- Expanding eligibility to Medicaid coverage.
- Limitations on disenrollments.
- Required inclusion of children on plans through age 26.
- Establishment of health insurance exchanges to permit purchase of health coverage.
While many have questioned how much of a cost these expansions will carry, such provisions do mean more people will have health care coverage.
The other two goals of the reform bill are addressed much less directly.
One element of the legislation designed to address the other two goals is the concept of Accountable Care
Organizations (ACOs). Many observers say these organizations hold promise to both slow cost increases and improve the quality of care that our health care system delivers.
ACOs are designed to be flexible organizations that make providers accountable for the cost and quality of care they provide. Physicians and other providers, instead of insurers, third-party administrators and the like, are to be made more responsible for determining what care is needed and to eliminate unnecessary care while improving quality.
The goal of ACOs is to eliminate the perverse incentives of the health care payment system that reward the provision of more care instead of better, coordinated care. New methods of paying for health care, with payments transitioning away from fee-for-service payments, lie at the heart of ACOs.
However, ACOs and the changes required to make them work raise numerous financial, legal and practical challenges if their promise is to be realized.
Perhaps for these reasons, the health reform bill did little to implement ACOs, even over time. Rather, the bill requires that ACOs and the concepts of accountable care be tested through a number of pilot and demonstration projects. Such projects will test elements such as shared savings programs (in which savings against projected cost benchmarks are shared among participants), bundled payment programs (in which one payment is made for all providers involved in an episode of care) and global caps (in which set amounts are paid to take care of the health care needs of a given set of patients).
These experiments will determine if our health care system can meet the challenges and transform itself in ways necessary to realize the promise of ACOs.
Given the buzz about ACOs and the promise proponents believe they hold, providers, insurers, employers and others in our health care system should assess their readiness for ACOs and determine how they can work with these organizations most effectively.
Frederick Geilfuss II is a partner, co-chair of the Health Transactions Work Group at Foley & Lardner LLP, Milwaukee.
