Accountable Care Organizations (MCO)

Another type of managed care program that was introduced is the Preferred Provider Organization (PPO). A PPO is comprised of a group of physicians, hospitals and other medical service providers who contract with employers, insurance companies or other plan sponsors. The PPO offers discounted pricing to these contracted organizations due to the high volume of business received. PPO’s typically have up-front cost sharing in the form of deductibles and/or co-insurance, which vary depending upon the actual plan chosen.

While our understanding has evolved with respect to certain advantages of MCO’s, our understanding of the disadvantages has also grown. This analysis will evaluate the use of MCO’s as a gatekeeper to controlling health care cost and offerings. It will evaluate the advantage MCO’s provide in a rapidly growing market due to the aging of baby boomers. The analysis will evaluate disadvantages that can arise with relying on MCO’s. These disadvantages work against the insurance company forcing a polarizing balance between how much control the MCO should retain over recommendation and provision of services.

An HMO provides comprehensive health-care services to the insured for a fixed periodic payment. There may also be a nominal fee paid for each visit to a health-care provider. Unlike traditional insurance, HMOs actually provide the health care rather than just making payments to health-care providers. HMOs can have a variety of relationships with hospitals and physicians. Plan physicians may be salaried employees, members of an independent multi-specialty group, of a network of independent multi-specialty groups, or part of an individual practice association.

Physicians are used to operating under a fee for service payment method, which means they are paid separately for each service they perform. ACOs do not necessarily go away with this mentality. Instead, they do follow this method but offer incentive such as bonuses when fees are kept down. The focus is on prevention of disease. Each physician and healthcare system has benchmarks they must meet for bonus eligibility. In short, physicians are paid more to keep their patients out of the hospital. ACOs are also watched to be sure they are saving money. If an ACO does not meet performance benchmarks, they may be penalized with a fee (Gold, 2015).

The relationship of an HMO and its physician member is to help provide a wider range health care for its patients and a wide area of services available for its physician members. A patient must choose a primary care physician from a list of providers. The relationship with the physician provided from the HMO is in a contract that is to deliver services to their patients for a fee. There can also be a group plan which is a HMOs contract with a group of physicians to deliver services. The HMO organization compared to PPOs, a PPO is a variation of an HMO, and it features traditional insurance and managed care.

The Accountable Care Organization was designed for quality care but it also focuses on the revenue that is brought to the organizations. Furthermore, it can lower costs. Theoretically, ACO’s lower costs and more improve the quality of care. The are both benefits and drawbacks of ACOs. On the positive side, they have been proven to lower costs for the payers. ACO’s have payment aligned with the quality and efficiency of care delivered. ACOs are a new Medicare payment used to help expand Medicare and private payers. ACOs are not an HMO plan or PPO plan. ACOs are used to implement comprehensive payment reform. There are three ACO payment options. These options are Shared Savings, Partial Capitation/Bundled Payment and Full Capitation.

ACOs provide high-quality care to their patients and reduce cost by avoiding unnecessary duplication of services and preventing medical errors. ACOs may involve a variety of provider configurations, it can range from integrated delivery systems and primary care medical groups to hospital-based systems and virtual networks of physicians such as independent practice associations (McClellan et al, 2010).

The book discuss about three major types of managed care organization: health maintenance organizations (HMO), preferred provider organizations(PPO), and point of service plans(POS). Managed care has been around for minute. This organization has been around since 1930s. The three managed care organizations are require an agreement between the insurer and a network of health care providers. Policy holders are encouraged to use the providers in the network by the fact a percentage will pay the cost of care if received outside the network.

However, many healthcare groups disapproved of the proposal as costly due to the partial incentives offered by the program. Correia, E (2011) stated the Affordable Care Act and regulations of the formation of ACOs provide a creative form of reimbursement that is intentional to motivate providers within the ACO to reduce costs while maintaining quality. This ensures hospital administrators and physician groups are supposed to provide the best care while ensuring the patients remains healthy in their care.

​Kaiser Health News recently published an article on a new trend in healthcare. This trend introduces the Accountable Care Organization (ACO). The Centers for Medicare and Medicaid services defines it as “groups of doctors, hospitals, and other health care providers, who come together voluntarily to give coordinated high quality care to their Medicare patients” (“Accountable Care Organization,” 2015). According to the Affordable Care Act (ACA), the goal of the ACO is to be able to share health cost-savings with providers who are able to save money by eliminating unnecessary procedures and reduce health costs while increasing quality of care. ACOs make health professionals become more accountable in maintaining good-quality, coordinated healthcare for a patient through a value-based system that is evaluated through a number of criteria and benchmarks (Ronai, 2011).

The viewpoint of their proponents, there is a difference from historical managed care arrangements in ACOs predominantly HMOs since they are centered around providers ahead of insurers and usually are not detained at complete monetary peril for the price of health care. In an ideal world, ACO payment approaches will include improvements in quality of care measurement that take into account the range of service delivery ACOs are designed to provide. If legislated, nationally health reform could most likely include more or less research with ACO incentives. On November 7th , 2009 the United States House of Representatives passed, the Affordable Healthcare for America Act (H.R. 3962) which called for pilot payment incentive that would encourage ACOs in both Medicaid and Medicare, along with other policies on payments alterations and authorized demonstrations and pilots (Huntington, Covington, Center, Covington, and Manchikanti,

The American health care system has been victim to an escalation in the prices of health care services juxtaposed with inefficiency in delivery of care services. There has even been cases where State spending on the actual health care increased dramatically in the United States and one of the key components of curbing this problem which has been prevalent over the mass media and has been a major discussion among physicians is the advent of Accountable Care Organizations. Accountable Care Organizations (ACOs) is structured with the goal of trying to improve health care delivery and aid in the reduction of the overall cost of services (Weissert & Weissert, 2012). If there is insufficient coordination of high quality care delivery in the health care industry, this will have a negative impact on patient safety and diminish affordable care for patients. Hence, the development of ACOs is envisioned to be the savior of medical practices and can improve the overall fabric of the American society (Bresnick, 2013). ACOs serves as one of the answers for curbing the problem of high costs, low quality care and possible segmented delivery and as much as it serve as the major determinant for improvement in patient satisfaction, there are minor

There has been discussion to have universal healthcare system similar to Medicare as a method to have a centralized monitoring system of cost. There have also been other systems tried beginning with HMOs in the 1970s in an effort to streamline access to necessary healthcare services by employing a gatekeeper to their access at the primary care levels. With patient dissatisfaction, PPOs were tried which circumvent the necessity of referrals (Hacker, 1998). Either of these models had substantial effect on healthcare outcomes while the cost of healthcare continued to skyrocket. The US spends more than any other country on healthcare but outcomes are not better (Blackstone, 2016). In 2010, under President Obama’s leadership, Affordable Care Act was passed and one of the promising features is the formation of accountable care

ACOs intensity the incentives to improve the quality and reduce the cost in health care. The coordinated care provided by an ACOs is to ensure that patients and populations are especially the person chronically disease get the right care, at the right time and placed without any harm, while avoiding care that has no proven benefit or represents an unnecessary repetition of services. Also, having the potential to reduce the number and significance a medical error in the United State.

The types of managed care are differentiated by definition, operation, structure, and information needs. `HMOs were the most common type of MCO until commercial insurance companies developed PPOs to compete with HMOs' (Douglas, 2003, p.331). `HMOs are business entities that either arrange for or provide health services to an enrolled population after prepayment of a fixed sum of money, called a premium' (Peden, 1998, p.78). There are three characteristics that an HMO must have. The first is a health care financing and delivery system that provides services for members in a particular geographic area. Second, is ensured access to a complete range of health care services, health maintenance, treatment, and routine checkups. Last, health care must be obtained from voluntary personnel that participate in the HMO. The five HMO models related to the participating physicians are the Staff