What were HMOs originally designed to do through the HMO Act of 1973? Are the original objectives finally being met through ACOs? We give you the answers here.

1. THE HMO ACT
OF 1973
BY TXCIN
OBJECTIVES FINALLY
MET THROUGH ACOS?

2. Signed into law by President
Richard M. Nixon on December
29th, the HMO Act of 1973 was
ambitious legislation that initiated
a long, bumpy, and unsatisfying
endeavor to establish a
comprehensive healthcare delivery
system that lowered medical costs
and provided quality care to every
American

3. Although HMOs gained some early
momentum through government
funding and subsequent
legislation, mistakes in
implementation, deficiencies in
modern technology, and
inadequate measurements for
quality assessment hindered HMOs
from fully meeting their objectives,
and subsequently created a
“managed care backlash” in the
late 1990s

4. Designed to take advantage of the
historical benefits of HMOs, while
avoiding their drawbacks, ACOs are
leading the transition to value-
based care, and experts are
optimistic that strategic
implementation, advances in
modern technology, and focused
quality-assurance measurements
will enable ACOs to finally achieve
the objectives that their
predecessors could not.

5. In theory, HMOs were expected
to control costs in three major
ways: through their emphasis on
preventative care which would
decrease hospital utilization;
through their capitated
payment structure which would
incentivize cost-efficiency; and
through their group practice
collaborations which would
encourage the streamlining of
health care systems, procedures,
and resources (Uyehara).
CONTROL COST

6. HMOs were expected to assure
better quality health care
because they organized
physicians into collaborative
physician groups where shared
ideas, resources, and medical
records would enable greater
continuity of care for patients.
This objective may have
succeeded had HMOs had some
specific, measurable goals for
quality assurance; ironically, the
HMO Act of 1973 outlined
minimum requirements to hold
HMOs accountable for quality
care.
ASSURE QUALITY

7. Although legislation called for
research, evaluations,
independent studies, and annual
reports concerning the
effectiveness of managed care,
HMOs were not incentivized in
any way to provide high-quality
care, other than to remain
financially solvent, and there was
no legislation prescribed to
effectively hold HMOs
accountable for assuring quality
care.
ASSURE QUALITY
(CONT.)

8. Finally, HMOs were expected to
improve healthcare access
across the country, specifically in
underserved and low-income
areas. The assumption was that
as group practices formed, they
would attract physicians to
more remote areas, or to areas
with lower income populations.
This expectation did not
materialize however with
experts recognizing that “rural
poverty, financing difficulties,
and population dispersion
create[d] obstacles to group
practice prepayment plans”
(Uyehara).
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ACCESS

9. Understanding the implications
that the Quality Payment Program
(QPP) has on clinicians, CMS has
offered generous flexibilities to
support HPSA and MUA clinicians.
For example, providers who now
serve in rural and low-income areas
can partner as ACO virtual groups to
capitalize on the benefits of being
in larger organizations. Solo
practitioners and small group
practices can serve as virtual ACO
groups in value-based contracts to
improve healthcare access and to
improve financial sustainability for
providers in rural and low-income
areas.
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ACCESS (CONT.)

10. HOW ACOS SUCCEED
Almost fifty years after the HMO Act of 1973,
today’s healthcare objectives remain the same:
control costs, assure quality, and provide
healthcare access to more people. Accountable
Care Organizations (ACOs) are leading the way in
value-based care reform, and experts are
optimistic that strategic implementation,
advances in modern technology, and focused
quality-assurance measurements will help ACOs
succeed where HMOs could not.

11. Want
More?
http://www.insight-
txcin.org/post/the-hmo-act-
of-1973-objectives-finally-
met-through-acos

12. ABOUT
TXCIN
North Texas Clinically
Integrated Network, Inc. (dba
TXCIN) is a non-profit ACO
that began in late 2014. A
small group of independent
physicians aligned to initiate
clinical integration and value-
based contracting. Partnering
with RevelationMD and its
state-of-the art information
platform, TXCIN has become
the largest independent
network of physicians in North
Texas.