What is PNHP view of ACOs?
While the term ACO remains at best vaguely defined, the concept is hauntingly similar to the capitated managed care experiment that proved disastrous in the 1990s. In both instances, providers receive a set annual payment to cover the costs of all care, and get to keep whatever they don’t spend on patients. The obvious winning strategy – from a business point of view – is to recruit relatively healthy patients, offering luxurious care for the healthy and minimally ill, and subtle queues that those with expensive illness would be better off elsewhere. Neither risk adjustment nor quality monitoring schemes are up to the task of blunting these incentives. An ACO can game risk adjustments by ferreting out additional diagnoses that may be clinically unimportant but would up its capitation payment, and make its outcomes look better as well. The Dartmouth group has already shown that more expensive providers label their patients with more diagnoses in this way. Quality monitoring efforts meas
