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What do ACOs mean for orthopedists?

ByDavid M. Glaser, JD

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The proposed rules for accountable care organizations (ACOs) are out. So, what do they mean? Well, first, keep in mind that the rules are only proposed. The final rules could wind up being substantially different. People will comment on the proposed rules, and the rules may be changed based on those comments.

Under the proposed rules, only primary care physicians are allowed to participate directly in an ACO. The proposed rules leave a great deal of ambiguity about how specialty services are to be affected.

Rather than detailing the proposed rules (If you would like to get a run down on the proposed rules, a May 11th webinar offered by my law firm will do just that. For more information, see: http://www.fredlaw.com/events/health.html), I am going to make one simple prediction: I don’t think ACOs are going to be a major player over the long haul.

I may be wrong, of course, but here are some reasons why I think ACOs are likely to be a flash in the pan:

1. The rules give little upside return with the risk. Even if the ACO accomplishes savings, the actual dollars to be realized are not significantly higher than what can be earned in a fee-for-service structure. I am not certain that many organizations will undertake the considerable effort, and the risk, for a relatively limited return.
2. Compliance looks to be pretty burdensome. Many elements of the rules will be a headache. Whether it is a requirement to report every violation of the law or an obligation to get CMS’ approval to make any change to your marketing materials, the rules don't look user friendly.
3. Déjà vu. ACOs are just a fancy name for capitation. Capitation appealed to folks briefly in the 1980s, until its significant downsides became apparent. Personally, I don’t want my physician to have a financial incentive to deny me care. If a physician is encouraging me to undergo a procedure, I can easily say no. But, if a physician is saying no to a procedure I want, I have no recourse. Capitation is not a customer-friendly model. Even if physicians and hospitals embrace ACOs, I have real doubts that patients will.

While I think ACOs are a blip, I still expect that many hospitals will use this as an opportunity to develop networks involving physicians. I also think that is quite possible that reimbursement will shift to more of a bundled payment methodology, where hospitals and physicians receive one bundled payment and are forced to fight over its allocation. But, bundled payments and ACOs are different. My personal belief is that in a few years we will be say “C U” to ACOs.