The Center for Medicare Services announced this afternoon that it has signed up 27 health care systems for the Accountable Care Organization program. That’s the part of the health reform law that gives a team of doctors a flat-fee for managing a set of patients’ care. If they can provide high-quality care for a lower cost, the difference as profit. If the idea works, it means the end of Medicare’s ‘fee-for-service’ reimbursement, and the beginning of real pay-for-quality.
Today’s new additions nearly doubles the ACO participants, bringing it up to 59 groups across the country. That number will almost certainly jump this summer, as over 150 health care systems have applied to join the program in July. Medicare has, so far, approved the vast majority of providers seeking to join.
“We’re on track to fundamentally transform the fee-for-service system,” says Jonathan Blum, Medicare’s deputy director. “For anyone who doubted the ACO program last year, today’s results should give them tremendous confidence that physicians do want to participate in this.”
And there were indeed a lot of doubters: When the Obama administration set the initial ground rules for ACOs, hundreds of comment letters poured in from health care providers vowing not to participate. The program was too risky, they wrote, and didn’t offer enough reward. If hospitals didn’t meet certain quality metrics, it could hit their bottom lines.
So Medicare revised the rule. Then-Medicare administrator Don Berwick recalls keeping a list of 35 different policy “dials” that his agency could manipulate to make the program more appealing. They could dial down, for example, some of the penalties for not providing care for less than the agreed-upon flat fee.
“That list sat on my desk, and you could adjust them up or down,” he told me in a recent interview. “We took out some of the risk, and strengthened the rewards.”
Most health policy observers agree that Medicare set the dials wrong on its first try. But, if the new surge in interest is any indication, the second time may have been a charm.