Is it worth it? That’s what plenty of providers are asking after the proposed rules by CMS. In the months leading up to the Centers for Medicare & Medicaid Service’s release of the proposed rules for accountable care organizations, Gregory Mertz, a senior project manager for the Healthcare Strategy Group,  says his consulting firm was engaged in numerous discussions with hospitals and providers regarding accountable care. His clients were eager to evaluate whether to form one, or collaborate with other hospitals or health systems. But Mertz says an interesting thing happened when the proposed rules were released in late March – silence.

“I haven’t heard of anybody that’s full speed ahead,” he says. “That was a bucket of ice cold water.”

Despite the waned enthusiasm with the proposed rules, Mertz says healthcare stakeholders are optimistic that the Feds will make some necessary changes to get more buy-in from providers when the final rules are released (CMS indicated the revised rules will be published some time before the end of the year). And perhaps even more important, stakeholders are becoming more aware that accountable care, in some version, will transform healthcare delivery in the United States.

 “There is no doubt in my mind that case pricing and value incentives are here to stay,” Mertz says. “We can no longer afford the traditional fee-for-service world and we’ve seen that external utilization controls just don’t work.”

But how do we get there? And what changes should occur to the final rules to help accountable care move forward? ACO Insights interviewed Mertz on his take. The following is an excerpt, including his insight into how vendors play into the changing healthcare landscape. For the full article, visit


ACO Insights: Why has accountable care generated so much interest in the last 12 months?

Greg: Mertz: The ACO delivery model is a very compelling approach to care: a bunch of doctors getting together in a cooperative way, sharing data, and managing the care of a defined population. It’s a great idea, and we’ve never done that before. We live in a fee-for-service world where we’re basically reacting to the patients. They want what they want, when they want it, and we deliver it. And it’s expensive.

I think the game changer, at least with hospitals and physicians, is the ACO model puts the physicians totally in the driver’s seat. If accountable care works, hospital utilization drops. All these hospitals thinking about and planning to move toward accountable care, they have to understand that, if they’re successful, they’re going to do a whole lot less business than they did before. And we’re back to the ’80s, where the primary care doctor is emphasized again. It’s a whole upside down delivery model from what we’re traditionally used to.

If in fact we believe this managed care world is going to develop, fee-for-service medicine is an endangered species. It’s not sustainable. We can’t afford to continue to deliver whatever patients want and have Medicare and Medicaid programs. Companies are pushing back over increases to their premiums and employees are griping about more cost being shifted to them. There are two answers to those problems – one is to pay providers less for what they do, which is a non-starter. Doctors and hospitals would simply stop taking insurance and stop taking Medicaid. The other solution is to deliver less care. It’s often called rationing, but we put it in a much better light and call it accountable care. We’re at the brink of a major seismic shift in the way healthcare is delivered and reimbursed.


ACO Insights: Based off of your observations, are physician offices, hospitals and health systems formulating ACO strategies, or taking a wait-and-see approach?

Mertz: I think most are waiting for the final rules. They see an ACO as an opportunity to spend substantial dollars and consume significant staff resources, so they want to be sure it makes sense before they move forward.


ACO Insights: Of those providers that aren’t developing strategies, why the wait?

Mertz: The majority are waiting because of the significant investment it would create and the uncertainty right now. The ones that are moving forward are focusing on clinical integration strategies and data system enhancements, which will be valuable even if ACOs ultimately go nowhere.


ACO Insights: What do vendors need to know about accountable care?

Mertz: Organizations will look at the care process, and what brings efficiency – things like the standardization of supplies. For instance, you’ll get all your orthopedists in the room, and they’re all going to standardize on a hip implant. No longer is the supply room going to stock two or three replacement hip products, they’re going to stock one. In the return for that volume, they’re going to go back to that vendor and say “I want a more aggressive price than we’ve had in the past.” So if you’re not that one vendor, you’ve lost out on a fair amount of business. They’re going to be looking at which products facilitate the best outcomes, at the most cost effective price. So a hospital or provider is going to be buying value, not steps or services, but end products. Vendors are going to have to be able to understand that, and be able to explain to providers why their product or products contribute to good clinical outcomes in a cost-effective manner.


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