Accountable Care Organizations: A Dangerous Regulatory Leap of Faith


While the general public has focused its present attention upon the controversial requirement that all citizens be required to purchase health insurance, the Patient Protection and Affordable Care Act of 2010 (“the Act”) raises potentially dire issues for physicians, physician groups, hospitals and consumers of medical care alike. The most vexing proposal calls for the creation of Accountable Care Organizations (“ACO’s”). In general, the Act envisions ACO’s as entities comprised of networks of doctors, physician groups and hospitals that somehow share collective responsibility for providing care to Medicare insured patients.i Indeed, while member physicians need not be part of the same hospital system, they will be jointly required to manage the full spectrum of the health care needs of its Medicare insured members (a minimum of 5,000) for at least three years.

As a result of this ambitious initiative, the Government estimates that ACO’s may save Medicare up to $960 million in the first three years of the program and the offer financial incentives for physicians to “buy in”. Proponents say that the ACO model allows successful participants to share in the savings if certain medical care quality objectives are achieved; if financial savings are demonstrated and if the organization implements programs that measure its clinical and cost-saving acumen. Here is another proviso: under existing plans, ACO’s meeting benchmarks would not obtain their elusive share of savings for eighteen to twenty-four months after the ACO began investing in the program.

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