Skip to content

What is an ACO?

November 14, 2012

Now that Mr. Obama has been re-elected, everyone has alot of questions about health care financing, insurance, cost and quality.  Most of them can’t be answered until we see how the new law plays out.  Here’s one thing that’s happening now that you as a consumer don’t yet see but will soon.

Insurance is moving away from the traditional fee-for-service (FFS) model.  In FFS, you go to a doctor, he does something for you, he gets paid.  He does more for you, he gets paid more.  In Massachusetts, approximately 60% of patients don’t get covered that way anymore.  Now people are put into a “global payment” system.  One of these is the Accountable Care Organization, or ACO.  The idea is this:  you doctor, or hospital, gets a certain amount of money from an insurance company to pay for all the care for everyone that they see.  A flat rate.  If the doctor or hospital doesn’t spend it all, ie, if their costs are lower, they get to keep the extra money.  If they spend more than that amount, ie, with more expensive care, they take the hit, not the insurance company.  The idea is to make the doctor or hospital put some skin in the game, so they will be incentivized to spend less on you.

This is not a bad thing necessarily.  With very few exceptions doctors and hospitals are not going to withhold things your really need.  They might stop doing some of the expensive and stupid stuff I’ve talked about in other posts on this blog, like ordering repeat labs and expensive MRIs when you don’t need them. 

What does it mean for you personally?  Money controls everything, including health care, so doctors and hospitals under ACOs are going to find ways to make things cheaper.  One way they will do this is to send you to a less expensive place for your routine, non-complicated things like knee scopes and bunions.  This means you won’t come into town to a big medical center for this stuff but will go to a community hospital or ambulatory surgery center.  This is not a bad thing!  What alot of people don’t realize is that the community hospital is often staffed by the same people that work at the big hospital downtown.  Same surgeons, same anesthesiologists, same primary care doctors.  Going to a smaller center doesn’t mean you will get worse care at all. 

Another way they will cut costs is to invest more money in preventive health.  This is a good thing!  The more doctors can help you stay healthy the less they spend on you and the less time you spend in hospitals and doctors’ offices.  Along the same lines, hospitals will invest more in case coordinators and others who provide patient advocacy.  This is a good thing!  In other posts I have pointed out the importance of having an advocate during your hospitalization.  These people can help you with that.

You don’t have to understand the insurance system, but you do have to realize that your doctor or hospital is under outside pressures that may explain why they make some of the decisions they do.  It’s not personal.  It’s business.


From → Health Insurance

Leave a Comment

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

The Ideal Violinist

By Bayla Keyes

Eclectic Voices

Fiction, Monologues, Plays & More

Competing Diagnoses

How Americans talk about health care reform

Navigating Healthcare - Patient Safety and Personal Healthcare Management

A Guide to navigating Healthcare for parents, children and spouses who are concerned with managing their health and the health of their family

Children's Book Reviews


Dr. Vineet Arora's thoughts on medical training, patient care, healthcare policy, with tips for trainees

Wright on Health

Making complex issues in health policy and health services research accessible to all...

Dr John M

cardiac electrophysiologist, cyclist, learner

Navigating the healthcare system


Navigating the healthcare system

Whole Mama

Navigating the healthcare system

medicine for real

Navigating the healthcare system

%d bloggers like this: