At its April 4, 2019 meeting, the staff of the Medicare Payment Advisory Commission (MedPAC) asked the commission to discuss a very strange proposal: Doctors who treat patients enrolled in Medicare’s traditional fee-for-service (FFS) program must join an “accountable care organization” (ACO) or give up their FFS Medicare practice. (The staff may have meant to give hospitals the same Hobbesian choice, but that is not clear from the transcript of the meeting.)

Here is how MedPAC staffer Eric Rollins laid out the proposal:

“Medicare would require all fee-for-service providers to participate in ACOs. The traditional fee-for-service program would no longer be an option. Providers would have to join ACOs to receive fee-for-service payments. Medicare would assign all beneficiaries to ACOs and would continue to pay claims for ACOs using standard fee-for-service rates. Beneficiaries could still enroll in MA [Medicare Advantage] plans. (p. 12 of the transcript)”

first question that should have occurred to the commissioners was, Are ACOs
making any money? If they aren’t, there’s no point in discussing a policy that
assumes ACOs will flourish across the country.

only two of the 17 commissioners bothered to raise that issue. They asserted
that Medicare ACOs are saving little or no money. Those two commissioners – Paul
Ginsburg and commission Vice Chairman Jon Christianson – did not mince words.
Ginsburg said ACO savings were “slight” and called the proposal to push doctors
into ACOs “hollow” and premature. (pp. 62-63) Christianson was even more
critical. He said the proposal was “really audacious,” and that no “strong
evidence” existed to support the claim that ACOs “can reduce costs for the
Medicare program or improve quality.” (pp. 73-74) Ginsburg and Christianson are
correct – ACOs are not cutting Medicare’s costs when Medicare’s “shared
savings” payments to ACOs are taken into account, and what little evidence we
have on ACO overhead indicates CMS’s small shared savings

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