• The Carrot and The Stick

    The Carrot and The Stick

    By Dr. Kenneth Rothaus

    Many of the big health insurance companies are withdrawing from the exchanges established under Obamacare. These exchanges represented one of the major innovations of the ACA.  One of the other pillars of cost savings in the Affordable Care Act was the Affordable Care Organization (ACO).  These too may be losing participants.

    In 2006, Elliott Fisher and his colleagues of Dartmouth Medical School published a landmark paper that became the basis for the ACO. The concept theoretically had some validity.  Put simply, before the Affordable Care Act, Medicare held physicians responsible for the quality and cost of health care.  As most of the Medicare rated physicians worked in or were affiliated with a hospital, it made sense to the authors to judge the hospital and physicians as a unit. In other words, they would be jointly held accountable for the cost and quality of the care delivered.  Each ACO would be required to meet unique benchmarks and goals of quality and cost savings determined by the Center for Medicare and Medicaid Innovation.  (This center was created by the Affordable Care Act to find ways to save Medicare money without hurting the quality of care delivered.)

    Naturally, as the birthplace of the concept of the ACO, Dartmouth Medical School established an Affordable Care Organization after the Affordable Care Act became law.  Because of mounting losses, Dartmouth closed its ACO last year. According to the Darmouth ACO, continuing losses under the formulas established by Medicare could not be sustained.

    Did Dartmouth fail to deliver quality care? NO!

    Did Dartmouth fail to reduce costs of delivery of care? NO!

    What they failed to do was to meet the money saving benchmarks established by Federal officials.  By failing to meet these goals, Dartmouth had to return monies received to Medicare, a total amounting to $3,600,000.  It seems logical that Dartmouth should have been rewarded for improving care and reducing costs.  Under the logic of the ACA it was punished.  It seems that the law has placed a stick where it would be better served by a carrot!

    Do you think Dartmouth was unfairly punished? Should the responsible Federal Officials have provided a safety net for this and other pillars of ACO/ACA?

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