Are ACOs Really Different from HMOs?

Accountable care organizations are a "fad" and "not very different from the HMO model… [with] a few bells and whistles, but otherwise it's the same old incentive to do as little as possible and find the healthiest patients you can," says a director of the Association of American Physicians and Surgeons.

Originally published in Managed Care Contracting and Reimbursement Advisor December, 2013

Accountable care organizations (ACO) aim to completely revamp how healthcare is delivered in the United States, promising better quality and lower costs. But physicians who have heard these promises before are wondering if ACOs are just the new version of HMOs, the same lofty concept dressed up in a new way.

ACOs are the just the latest fad, according to Richard Amerling, MD, associate director of clinical medicine at Albert Einstein College of Medicine in New York City, director of outpatient dialysis at Beth Israel Medical Center, and a director of the Association of American Physicians and Surgeons.

HMOs also were touted as the revolutionary way to save healthcare in America, Amerling says. In that model, the physician served as a gatekeeper for the insurance companies to control access to high-level care, tests, and hospitalizations. Under a capitation arrangement, the physician was paid a set amount per patient to coordinate care, which Amerling says provided a strong incentive to restrict patient access to care.

In addition, capitation provided a bonus to the physician if total spending on patients was kept below a certain amount. The plan worked well if the physician's patients were overwhelmingly healthy, which encouraged cherry picking of the most profitable patients. But eventually the very sick had to receive care, and that threw the whole system off, Amerling says.

The differences between the HMO and ACO models are purely cosmetic, he says. ACOs also will have strong incentives to cherry-pick the healthiest patients and limit access to expensive medical care, and eventually that strategy will fall apart just as it did with HMOs, he says.

"It is fundamentally not very different from the HMO model," Amerling says. "There are a few bells and whistles, but otherwise it's the same old incentive to do as little as possible and find the healthiest patients you can."

Amerling says his concerns are borne out by the experience of the Pioneer ACOs that recently reported their results. All of the 32 health systems in the Pioneer ACO program reported improved scores on quality measures such as cancer screenings and controlling blood pressure, but only 18 were able to lower costs for the Medicare patients they treated. Two hospitals reported losing money on the ACO program, and seven notified CMS that they will switch to a different ACO because of the monetary strain. Two said they will dump the ACO model and find another approach with less financial risk.