Healthcare · Health Policy

How prevalent are Accountable Care Organizations (ACO's) and is this going to be a growing trend?

Ken Steinberg Innovator and Serial Market Disrupter

June 27th, 2016

We are considering a path to market, for a class 1 screening device, which would be favorable in an ACO healthcare environment.  Love to hear your thoughts on the following...
  1. Are ACO's a trend or just a "fad"?  Will CMS/Medicare push these various ideas to all providers in the coming years?

  2. Will there be a big push toward medicare reimbursement for screening as opposed to treatment?  (I suspect yes but...)

Dr. Conway Licensed Clinical Psychologist; Owner of HELP Behavioral Health Services. In-home/In-facility/In-office/Video Visits

June 27th, 2016

Ken, Thank you for sparking my curiosity about ACO's. It seems like it is an organizational environment somewhere between being an independent Medicare Provider and a HMO (ie: Dual Medicare/Medi-connect) Medicare Provider? An ACO would ​​be ideal for a screening device if the Medicare rates remained the same. I believe ACO's are a way for Medicare to reduce their reimbursement rates over time, and the incentive of forming groups is probably the trend. San Diego has several pilot programs, one of which is for mental health, which has not shown success in its outcomes. Many of the mental health docs have opted out of Medicare, just because the reimbursements have decreased over time, for those who contract with HMO's and ACO's. I'm still trying to understand it myself, My organization has always operated with independent contractors rather than a group, although we have a group NPI and Provider number, and could go in that direction. The G-codes in billing seem to point in the direction of screening v treatment. Medicare now reduces reimbursement to those providers who do not screening their patients 50% annually. The push in mental health is accountability and screening. Thank you for your stimulating questions, Annette

Mitch Harris Co-founder/CTO of QPID Heath

June 27th, 2016

In ACOs (Accountable Care Organization), there are multiple ways of managing cost at the same time as holding the hospital (or other care center) responsible ('accountable') for quality. Though ACO is often discussed in opposition to FFS (Fee For Service), FFS is one of many strategies that an ACO uses, in addition to capitation placing caps on payments), incentives (for meeting benchmarks), and fees (for not meeting benchmarks). It is all very complex (= I'm not sure of all the details).

you're asking if ACOs will last a long time. They are a current trend that CMS is pushing (with MU/MACRA) so there is a lot of incentive for hospitals to turn to ACO. Is it a short term trend (i.e. a fad)? in the 1970's and 80's, the concept of the HMO (Health Maintenance Organization) was created. It did well for a short period then lapsed in the 90's. And there are supposedly a lot of similarities between HMOs and ACOs. I suspect that ACOs will last at least as long as HMOs did, and probably longer (till the next accounting system idea comes along).

- Will there be a big push towards reimbursement for screening? There already is. It is a well recognized fact that screening (and prevention) saves health care dollars. And many such screening procedures have had reimbursement established (BP for HTN, yearly blood test for so many things, colonoscopies, mammograms, prostate exams, etc) and secondary screenings (e.g. a patient had a polyp so a higher frequency of screening colonoscopies are scheduled). So the trend here is definitely towards making screening more available and so reimbursement process is made easier.

There is some newsworthy questioning of too much screening: unnecessary reaction to positive results which may be false (mammo fears -> mastectomy, high PSA-> unneeded prostate surgery), bad business practices (Theranos scandal). The second is irrelevant, but the first is science which will determine better what kind of screening should and shouldn't be encouraged (by reimbursement).

Thomas Kaled Business Development Consultant @

June 28th, 2016

@KenSteinberg there has been a consistent and demonstrable move toward coupling reimbursement and quality outcomes in Healthcare since the shift from cost-based to prospective pay for patients whose 3rd party is CMS since at least the mid 1970's and were actualized initially thru TEFRA in 1982. ACO's are the contemporary manifestation of what has now been a 40 year trend of placing fiscal management of disease's with a Health Care Provider gatekeeper. Whether this model sustains or evolves is difficult to predict however without actuarial data and statistical modeling expertise readily available to these groups it is likely not a sustaining model financially. 

Ken Steinberg Innovator and Serial Market Disrupter

June 27th, 2016

@Mitch- fantastic...thank you.

Michael Schaiberger Medicaid Managed Care & Health Benefit Professional

June 27th, 2016


Ken Steinberg Innovator and Serial Market Disrupter

June 29th, 2016

@all, thank you for your insight and further confirms my understanding! :)

David Mair Destination Medical Care Thought Leader/Entrepreneur/Speaker

July 1st, 2016

Ken, good questions. I may not be as enthusiastic about ACO's and their future as others who have commented so far.  They are a development of the Affordable Care Act whose focus is on provider groups coming together under the banner of payment for medical care based on achieving defined health outcomes.  Initially, they have been focused on Medicare and Medicaid patients.  The reason those groups were selected is that government controls the payment scheme for those patients.  So far, the results have been mixed at best.

With the current focus on screening that are required/approved by USPSTF, I don't see a significant emphasis on screening in the absence of other indicators of disease.  The players inside ACO's are still reliant on fee-for-service as a compensation method and hoping that others in the group, or the collection of services within the group, actually result in some cost savings.  That is why a number of ACO's have already been abandoned.  Among those tat remain, I see an alarming trend toward lowering the bar on medical outcomes that may serve the ACO but leaves the patient poorly served.

If you have a screening device, I believe you'll want to consider how to position it as a more effective early identifier or predictor of disease than exists today.  Otherwise, you may face a situation in which you are increasing costs within the ACO (unless you agree to be paid on a percentage of cost savings basis across all providers, another stumbling block for ACO's).