Paying for Care

About a year and a half ago, we ran a Diabetes Flashpoints piece about Accountable Care Organizations[1], or ACOs: a creation of the Affordable Care Act (“Obamacare”) that basically consists of networks of doctors, hospitals, and other health-care providers that agree to take full responsibility for their members’ medical needs. Although under the law they are set up to provide care to Medicare recipients — and to test ways that Medicare might save money — ACOs could eventually accept patients with private insurance, if insurance companies cooperate, or simply replace private insurance by offering their own plans as a network.

Some health policy experts believe, in fact, that the old private insurance model may even become extinct as a result. In a piece published earlier this year[2] on the Web site of The New York Times, Ezekiel J. Emanuel and Jeffrey B. Liebman write that ACOs will most likely provide better care than traditional insurance networks through both better coordination and properly placed incentives. For example, they write, under the current system, a hospital has no incentive to hire nurses to follow up with patients after they are discharged in ways that might help prevent future admissions — such as helping people with diabetes improve their blood glucose control. In fact, not only would the hospital lose money by paying for the extra nurses, it would be giving up revenue from readmissions that these nurses might help prevent. However, if that same hospital were paid a lump sum for each patient it treats, with added incentives for healthy outcomes, it would probably realize that paying for more nurses to reduce readmissions both saves money and leads to better results.


But as a report released earlier this month[3] makes clear, how a health-care network gets paid is only part of the equation when it comes to incentives. There is also the question of how the people who make medical decisions within a network — doctors, mostly — should be paid by the network. The report, published online by the Commonwealth Fund, mentions five possible ways for doctors to be paid. These include earning a straight salary, getting a share of all of the network’s revenue, getting paid based on procedures administered, getting paid in accordance with incentives for good outcomes, and getting paid based on how much money an individual brings into the network. It is possible, of course, to be paid according to some combination of these models, and the report recommends that ACOs base their doctor-payment procedures on factors which may vary from network to network. For example, some networks may not be able to effectively recruit or retain doctors if they are not guaranteed a certain income, while other networks may find that their doctors enjoy working in a system of incentive-based payments.

Do you support the federal government’s effort to encourage ACOs? Are there other ways to encourage health-care providers to accept payment according to the conditions they are treating and health-related outcomes, rather than for specific tests and procedures? Would you trust a health-care network to act as an insurer, without cutting corners once it is no longer billed for specific procedures? Is it foolish to think we can lower the cost of care while improving its quality at the same time? Leave a comment below!

  1. piece about Accountable Care Organizations:
  2. piece published earlier this year:
  3. report released earlier this month:

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