Code Red: Two Economists Examine the U.S. Healthcare System

July 26, 2010

Holding Accountable Care Organizations Accountable

Filed under: Uncategorized — David Dranove and Craig Garthwaite (from Oct 11, 2013) @ 10:46 am

We are finally getting some writing momentum. In the next few weeks, we will reveal snippets from our first full chapter (which will actually be one of the last chapters of the book.) Here is how our chapter on measuring health plan quality begins:

Terminology seems to mean a lot in healthcare. Insurers make money when their enrollees don’t receive medical care. So they describe themselves as “managing” care and “maintaining health”; would you enroll in a “Health Services Stinting Agency?” When hospitals merge with each other and acquire physician practices, they say that care delivery has been organized and integrated; no one has suggested using the name “Conglomerated Health.” The newest generation of healthcare organizations claims to be “accountable.” But whom exactly are Accountable Care Organizations accountable to? And in what ways are ACOs more accountable than their predecessors?

Terminology aside, we have argued that the main distinction between ACOs and the entities that preceded them is the extent of integration. All of them are supposed to hold down costs while improving quality and, integration-wise, PHOs bear a striking resemblance to ACOs. If the latter are more accountable than their predecessors it is not because we have finally found the right way to organize care. Instead, it is because we have found better ways of measuring and reporting quality. In this chapter we carefully examine the ongoing revolution in measurement and reporting of organization quality. While we agree that there have been dramatic improvements, we are not convinced that the conclusion is to organize care around ACOs. The most promising quality metrics may allow a wider variety of organizations to emerge, allowing the market to sort out which entities should survive.

Concerns about HMO Quality

Health plan accountability serves roughly the same purposes as provider accountability. Consumers are better off when they enroll in high quality plans. And when high quality plans prosper, all plans have an incentive to improve, making consumers even better off. This can be accomplished through the market, if employers or their employees read and react to report cards or other indicators of quality, or through government fiat, if regulators require plans to exceed quality thresholds.

Despite the allure of accountability, there were essentially no measures of health plan quality during the heyday of indemnity insurance. This was not for lack of potential measures. It would have been possible to document care processes at competing insurers, such as vaccination rates, or outcomes, such as the percentage of low birthweight babies. Many differences would probably have been statistically significant. But these differences would have had no practical importance because they would have reflected differences in the enrolled populations. An individual choosing among competing indemnity plans would have expected essentially the same quality of care and would have been wise to ignore any “report card.”

The rise of HMOs focused attention on quality. At a minimum, it would be important to know whether less care meant worse care. It would also be important to know whether some HMOs were providing better care than others. Donabedian cogently expressed what many in the health sphere were feeling:

People, awash in the alphabet soup of acronymic health care providers, are beginning to murmur their discontent; in the boardrooms of corporations, … in the labyrinthine folds of government…; and in the rarefied air of academe. It is an awakening to wonder at, a return to sanity we must applaud.

Donabedian could have added the living rooms of everyday citizens who by force of employers giving them no option, or through their own choice, were enrolling in new kinds of health plans that had banished the “anything goes” practices of indemnity insurance.

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