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Healthcare cost in the United State

Healthcare cost in the United States (U.S) has been increasing steadily. One of the major contributors to the rising costs [this is plural throughout your paper] of healthcare is chronic diseases. Addressing this growing burden continues to be a major policy priority. The Affordable Care Act (ACA) signed into law by the Obama Administration on March 23, 2010 was aimed at controlling the cost of health care.

The ACA represents the first major piece of social legislation toward comprehensive reform of the U.S. healthcare system since 1965 with the enactment of the Medicare Act. Components of these enacted reforms seek to change aspects of both private and public health insurance programs by expanding affordable coverage without exclusions, exceptions, or community rating (Manchikanti, Caraway, Parr, Fellows & Hirsch, 2011). The legislation is intended to curb the current trend of national medical spending and decreasing the national debt. More specifically, the essential element of the act seek to provide quality and affordable healthcare for all Americans; expand the role of public programs to increase access to people living at or below the federal poverty line; improve the quality and efficiency of healthcare through evidence based health outcomes; prevent chronic diseases through public health and community health programs; emphasize primary care through the education of the current and future healthcare workforce; increase the transparency and accountability of healthcare providers; improve access to innovative medical therapies and procedures; provide community living assistance and support services; and revenue provisions that seek to promote cost efficiency. (Manchikanti, Caraway, Parr, Fellows & Hirsch, 2011). The reform act, it is estimated will provide access to care to 34 million uninsured Americans (Sharamitaro, 2011).

One of the provisions of the ACA is the establishment of the Accountable Care Organization (ACO); a form of payment and delivery reform model that tie provider reimbursement to reductions in the total cost of care for an assigned population of Patients (Center for Medicaid and Medicare Services (CMS) 2010). It was formed in part to be used as a tool to check the cost of chronic diseases by encouraging cost effective disease management approach.

Accountable Care Organizations

The ACA includes provisions that promote the establishment of ACOs within the Medicare program beginning January 1, 2012 (Adrion and Anderson (2010).The ACO is a model envisioned for improving quality of care and reducing unnecessary costs through coordination and collaboration among provider. It ensures that care is organized and delivered across the continuum. (American Hospital Association, 2012) . Under the ACO, group of doctors, hospitals and other healthcare providers form a coordinated structure to give high quality care to their Medicare beneficiaries (as well as privately insured patients). This is to avoid duplication of healthcare services and prevention of medical errors when managing patients with chronic disease in general, and diabetes in particular. It is expected that if ACO provides healthcare services at a low cost without compromising quality, the shared savings it achieves will be split between the ACO member groups and the Medicare in a predetermined cost saving formula (CMS, 2012).[ACOs both present and future are not designed only for the Medicare population. There are many demonstration projects with other populations.]

Group of providers and suppliers that satisfy certain criteria set forth by CMS may come together to manage and coordinate care through ACO for Medicare fee-for-service patients, under section 3022 of the ACA shared savings program. ACOs meeting certain quality performance standards will qualify to receive payments for shared savings from the government (ACA, 2010) Language from the ACA specifies that an ACO must:

“(1) Be willing to become accountable for the quality, cost and overall care of the Medicare fee-for-service beneficiaries assigned to it; (2) Enter into an agreement with the Secretary of HHS to participate in a program for not less than a three-year period; (3) Have a formal legal structure that would allow the organization to receive and distribute payments for “shared savings” to participating providers of services and supplies; (4) Include primary care ACO professionals that are sufficient for the number of Medicare beneficiaries (at least 5,000) assigned to the ACO; (5) Provide the Secretary with information regarding the ACOs professionals necessary to support the Medicare beneficiaries assigned to the ACO, to implement the quality and other reporting requirements under the program and for purposes of determining the payments for shared savings; (6) Have a leadership and management structure that includes both clinical and administrative systems; (7) Defined processes to promote evidence-based medicine and patient engagement, report on quality and cost measures and coordinate care (such as through the use of Telehealth, remote patient monitoring and other enabling technologies); (8) Demonstrate to the Secretary that it meets patient centeredness criteria specified by the Secretary, such as the use of patient and caregiver assessments or the use of individualized care plans; (9) Establish a mechanism for shared governance with the providers; and (10) Not participate in other government-based shared savings programs” (ACA, 2010)

The Department of Health and Human Services (HHS) will establish a contractual working agreement with different ACOs based on guidelines identifying HHS expectations of ACOs. In the new mandate, an ACO would agree to manage all of the health care needs of a minimum of 5,000 Medicare beneficiaries for at least three years (Gold, 2011). The HHS expects ACO to save money after managing these 5000 Medicare beneficiaries after a 3-year period, and the extra savings generated as a result of the ACO cost containment will be shared by Medicare and the ACO, provided quality of care is not compromised. ACOs will be rewarded financially for providing better quality care at a lower cost- a practice commonly termed as “pay for performance.” ACOs mandate will impact hospitals’ operating budget and the ability to provide quality care.

It should be noted that it is not only CMS that can go into a contractual agreement with an ACO, private insurers can also form a legal agreement with ACO depending on the particular private or commercial insurer contractual terms with the ACO. As the case is in various health reform policy issues, CMS usually set the pace and other non-government third-party insurers follow suit. [You should really be discussing the specifics of how the ACOs work logistically. Also provide some statistics regarding number operational]

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