health care reform

The Affordable Care Act

Will the bill improve coordination of care in the U.S.?

Vol. 13 No. 1
Fall 2010

Return to Contents

The Well Being
Health care reform examined around the university

Health Care Reform
Key provisions from the Accountable Care Act

The Patient Protection and Affordable Care Act
Opportunity and uncertainty for academic health centers

"Among the most immediate challenges we face . . . is our communication efforts with the American public: we need to keep everyone informed about what the new law does and doesn't do, and how it will work for them."

"I'm a great believer that what medicine does best is to think about multiple causes for complex outcomes. And much of what I"ve heard over the last couple of years both in the medical science, sadly, and also in the political realm is exactly the opposite."

Ahead of the Curve
Challenging conventions with predictive health

Broadening our Lenses
Ethical reflections on health care reform

Thomas Jefferson: No Happiness Without Health

Cost Control and Health Care Reform
Defusing a fiscal time bomb

The Affordable Care Act
Will the bill improve coordination of care in the U.S.?

Health Reform Law and its Impact on Physical Therapists
Value across the spectrum of care

Placing Addiction in Historical Perspective
Health care reform and the limits of abstinence policies

Further Reading


The Patient and Protection Affordable Care Act (PPACA) will change health care delivery for all citizens, regardless of age, current health insurance coverage, or personal health. One thing most experts agree on is the PPACA will increase access to health insurance. Current consensus is that approximately 94 percent of all Americans will have health insurance coverage once the insurance provisions are fully implemented. The PPACA also addresses the lack of coordination of care within the current system. The primary purpose of this essay is to examine how the PPACA proposes to improve coordination of care.

The PPACA mandates testing a number of independent pilot projects—each of which, if proven effective and viable, could improve the coordination of care. For the most part, the PPACA left the development and implementation of these projects to federal agencies or newly created advisory boards, so much about them remains unknown. This essay reviews three pilot projects aimed at care coordination. For each pilot, this essay highlights its rationale, potential opportunities, and challenges that will need to be overcome.

Pilot 1

The Establishment of Accountable Care Organizations (ACOs) by the end of 2012. ACOs are groups of primary and specialty care providers that will coordinate care for Medicare beneficiaries currently enrolled in fee-for-service plans. The pilot requires ACOs to have shared governance, include primary care providers, cover at least five thousand Medicare beneficiaries, be accountable for all physician care, define processes to promote evidence-based medicine, and report quality of care. ACOs that meet quality benchmarks will share in any cost savings to the Medicare program.

Rationale: Critics often cite the lack of coordination between physicians treating the same patients, duplication of ancillary tests and services, and the use of emergency departments for routine care as major sources of waste in the U.S. health care delivery system. These critics also claim that there are several existing ACO-like organizations, the Mayo Clinic being frequently cited, providing high-quality coordinated care at below average cost.

Opportunities: Because they are accountable for the overall care of patients, ACOs offer two possibilities for better care coordination. First, ACOs may be more effective at using primary care providers to manage the majority of routine care and effectively involve appropriate specialty physicians as needed. Second, ACOs have the potential to integrate a broad array of services, including preventive services, nutritional education, and lifestyle/behavioral change programs to maintain or improve health and potentially delay the onset of chronic diseases. Better coordination and integration of health care services could also improve quality of care provided and consumer satisfaction.

Challenges: One major challenge to the ACO model is that consumers may balk at attempts to limit choice of physicians, especially specialists. Individuals in the private insurance market have demonstrated they are willing to pay higher deductibles and co-payments to have the right to use providers outside the insurer’s network. A second challenge to this pilot is the creation of regulatory procedures that are flexible enough to allow ACOs to take advantage of the strengths of the local health care delivery system to coordinate care, but detailed enough to assure that ACOs do not selectively enroll only healthy patients. ACOs are conceptually very similar to managed care organizations, which were unpopular with many providers and the general U.S. population. As a result, the federal agency developing the final rules and financial arrangements must assure that the managers of ACOs create financial incentives for primary care physicians to act as “care coordinators” and not as “gatekeepers.”

Pilot 2

Study of bundled payment for acute inpatient hospital services by January 1, 2013. This pilot program will define a bundle of services for an episode of care that begins three days prior to a hospitalization and ends thirty days following discharge. The bundle is expected to include acute inpatient hospital services, physician services, outpatient hospital services, and post-acute care services. The goal is to demonstrate that paying a single fee for a bundle of services will reduce total spending in the Medicare program but will not reduce the quality of care received.

Rationale: Most critics agree that bundling all hospital services into a single payment creates incentives for hospitals to improve the efficiency of care without reducing quality. Further, for selected acute inpatient hospital episodes, published clinical studies demonstrate that improving the coordination between hospital and post-acute care can reduce hospital readmission rates.

Opportunities: Theoretically, bundling payments for all hospital, physician, and post-acute care services into one payment creates the opportunity for all players involved to reduce the fragmentation of care and develop efficient treatment protocols across sites of care. Bundled payments also align the economic interests of hospital management and physicians to encourage the use of the most effective treatments (new or old) and to reduce hospital complications, improving quality of care, consumer satisfaction, and lowering health care costs.

Challenges: This pilot restructures the fundamental working relationships in the U.S. health care delivery system, in particular between physicians and hospitals. Additionally, this raises the question of who the patient advocate, or “team captain,” is once an episode of inpatient care begins. A second challenge will be the creation of regulatory procedures that define episodes of care, the services included in each episode, key quality measures, and the appropriate length of time for each acute episode, especially if a patient has more than one chronic condition. Consumer may also balk at the reduction in choice over consulting physicians, outpatient centers, and post-acute care services. For example, federal regulators will need to ensure that there are enough post-acute care sites so that patient travel costs do not reduce the likelihood that patients comply with recommended post-acute care. A final challenge for federal regulators is to assure that bundled payments for acute inpatient episodes, especially in single hospital communities, does not result in a single, vertically integrated health care organization with the market power to raise prices in the private health market.

Pilot 3

Independence at Home Demonstration Program by January 1, 2012. This program aims to provide high-need Medicare beneficiaries with primary care services in their home and to determine whether increasing access to primary care can reduce preventable hospitalizations, prevent hospital readmissions, improve health outcomes, improve the efficiency of care, reduce the cost of total health care utilization, and improve patient satisfaction.

Rationale: This program attempts to coordinate care for a specific subset of the Medicare population with special needs. A number of studies have documented the high cost of preventable hospitalizations among vulnerable elderly patients with special issues accessing primary care services.

Opportunities: A dedicated home-based primary care team should be able to improve the timing and coordination of primary care, leading to better health outcomes and satisfaction for vulnerable elderly patients. This pilot could also improve access to primary care and preventive services by broadly defining the types of health care professionals that can be part of home-based primary care teams. Elderly patients may also be better able to understand and comply with treatment protocols when they interact regularly with a familiar professional.

In the short run, increasing access to primary care services for this vulnerable patient population is likely to increase the use of ancillary tests and other outpatient services. Similar to other pilots, this project will require regulators to define the professional make-up of care teams, which patients are high-need, the scope of primary care services supported, quality benchmarks, and ongoing monitoring to ensure that patients are receiving appropriate and necessary care. Home health agencies have found that some patients are hesitant to open their homes to health care providers, and home-based teams may face the same challenge.


A review of these three pilot programs finds several common themes. First, while there will likely be significant modifications to the pilot projects when the final rules are released, all three of these programs will require new administrative rules and regulatory procedures to define stakeholders, describe covered services, monitor progress, and critically evaluate success over time. Second, each of these pilot programs will require changing long-standing working relationships and financial incentives in the U.S. health care delivery system. This suggests that the ultimate success of any of these programs will depend on stakeholders’ willingness to engage in change and how financial risks and rewards are divided among provider stakeholders. Finally, these pilot programs all require some level of restriction on consumer choice during an episode of care. Government restrictions on patient choice of provider have never been politically popular in the U.S.

Will the PPACA improve coordination of care in the US? The PPACA by itself most likely will not significantly improve the coordination of care in the current delivery system. However, the mere act of implementing, testing and evaluating the set of pilot projects contained in the bill will significantly increase all stakeholders’ attention and interest on improving the coordination of care. The long-term benefits of this increased focus alone would appear to be worth the effort.