Sharing Fairly

March 12, 2014

By Matthew DeCamp, MD, PhD,

In this week’s JAMA, Jeremy Sugarman, Scott Berkowitz, and I apply the ethical concept of “distributional fairness” to accountable care organizations (ACOs).  For this post I would like to step a bit outside our piece and offer my own personal comments about it.

First, some background on ACOs, as they are new to many and may not be well understood:

An ACO is a formal organization of clinicians (e.g., physicians, physician assistants, and nurse practitioners, among others), group practices, and in some cases hospitals, that contracts with payers to be accountable for the health outcomes and expenditures of a defined patient population.

If an ACO meets specific quality measures while keeping expenditures below defined historical benchmarks, it shares a portion of the monetary savings generated.  These “shared savings” create one incentive for participation.

ACOs are proliferating rapidly across the US.  Since 2012, more than 360 ACOs have formed in the Medicare program alone, covering more than 5 million beneficiaries.  ACOs exist in the private sector as well.

Whether contracting with public or private payers, ACOs have significant flexibility in deciding how to use and distribute shared savings.  For example, Medicare regulations only require that shared savings plans support the overall ACO mission and be “fair and equitable.”  However, “fair and equitable” is not defined, in part to allow ACOs to develop their own approaches and perhaps to experiment with different plans.

Now back to our paper:

In my view, our paper represents one of the first attempts to clarify “fair and equitable” for Medicare ACOs using different dimensions of distributional fairness (that is, ethical principles that can be used to determine an appropriate or ‘fair’ way to share a resource, such as shared savings).

Implied by our work is a move away from a pure “carrot” based approach that would use shared savings to reward individual clinicians based on their individual performance each year.  While this merit-based approach is important, we suggest four other dimensions of fairness an ACO should consider:

  • equal distributions to all clinicians
  • special distributions to low performing clinicians as a “boost” even when performance metrics are not met
  • ensuring distributions take into account “luck” (i.e., a clinician whose patients happen to have severe or costly illnesses in a given year)
  • non-performance-based, year-end bonuses

As we discuss, there may be no single “best” approach for all ACOs.  In addition, our paper only examines distributions to clinicians when, for example, one can rightly question how much of an ACO’s savings should go to clinicians as compared to infrastructure, administration, or more direct patient-level interventions (e.g., care management programs).

Nonetheless I am hopeful we have started a useful discussion that will be useful to real-world ACOs as they develop and of interest to bioethicists more broadly.

DeCamp M, Sugarman J, Berkowitz S. Shared Savings in Accountable Care Organizations: How to Determine Fair Distributions. JAMA, 2014. 311(10): 1011-12

decampMatthew DeCamp, MD, PhD, is an Assistant Professor at the Johns Hopkins Berman Institute of Bioethics.  His current research interests include global health (including ethical issues in short-term global health training programs); medicine 2.0 and medical professionalism; and health and human rights with a focus on essential medicines.  He also sees patients in general internal medicine.

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Matthew DeCamp

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One Response to “Sharing Fairly”

  1. […] an earlier post, I discussed our paper in JAMAthat laid out some basic ethical principles that could help determine […]

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