Some Thoughts from CAP about ACO’s

Recently while at CAP, I spent some time discussing ACO (Accountable Care Organizations) with several industry leaders.  It was interesting to see that they thought ACO’s offer a great opportunity for pathologists as in this model they could highlight the pathology skills as benchmarking outcomes and setting standards. 

Recently, one of our clients was asked by their hospital to join a coordinated care delivery system; this in fact is a version of direct capitation.  In this model, which is being touted as an ACO, all the providers sign a contract to provide services at a set fee, with the volume of work being “at risk.”  This means you get paid a direct flat fee for all your services whether you perform them or not.  No one mentioned or seemed to consider outcomes at all. 

In my experience, I have seen several versions of capitation come and go, and in every situation it is a difficult process to understand.  Although the concept seems simple, “pay everyone a flat fee for their work and they will keep volumes down”, it does not apply in the pathology arena.  Pathologists do not control care nor can they influence the volume of work that comes from their referring physicians.  So what do they have to put at risk? 

In reviewing the contractual payments offered for the above ACO, we noted that the health system was offering us about 37% of the state Medicaid program.  In this state it came out to about $6.66 for an 88305-26.  This is not a pretty picture. 

If we look at this in the larger general health care arena, we see a scary scenario.  We all know that the national health care plan is going to force more people into the health care system and this in turn will cause the volume of health care services to rise.  On the far end of this process will be pathologists who will see more specimen volume.  In theory, we could see pathology volumes going up and their payments going down at the same time.  If you consider that the new national healthcare plan will pay most services at the state Medicaid rates and the fact that ACO’s will only pay a percentage of this rate, we may be looking at the perfect storm of bad payments.