Will ACOs revolutionize health care?

By Barbara Marquand on January 9th, 2012

Depending on who you ask, an accountable care organization (ACO) is either an HMO in disguise or the next big thing that will transform health care.

Either way, ACO is a term you'll be hearing more about in the next year.

The health care industry has been piloting the concept in the last several years, and a provision in health care reform allows organizations to form ACOs as part of an effort to save money for the federal Medicare program.

An ACO usually includes a group of health care providers, such as a physicians group, a hospital and a health insurance plan. The providers agree to collaborate to improve patient care. They share information with one another to coordinate care so all of a patient's doctors know what the others are doing.

Ideally, the approach reduces duplicated services and improves follow-up so patients get the right care at the right time and the health care system saves money.

Coordination sounds like a simple concept, but it often doesn't happen in today's fragmented health care system. Patients with multiple, chronic conditions end up with several doctors who don't talk with one another.

Under the federal health care reform law, hospitals and physician groups can form an ACO for Medicare patients and benefit from some of the savings that result from better care coordination.

They can't share in those dollars, though, unless they meet quality standards -- a major distinction between an ACO and an HMO. Patients, meanwhile, are not restricted to seeing only providers who participate in ACOs.

The health care industry is also forming ACOs to serve patients who aren't part of Medicare.

Cigna, for instance, is planning or has already implemented 30 ACOs around the country. Its accountable care organizations serve patients and their families who are covered by employer-sponsored health insurance. UnitedHealthcare has also experimented with ACOs. It will launch pilot ACOs next year and was involved with forming an ACO in Arizona that included Tucson Medical Center and local providers.

Early results of ACOs show promise in saving money and improving health care, but it will take several years to see whether they can substantially cut costs over the long haul and fix the broken health care system.

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