Accountable Care Organizations May Be at Risk for New Medical Liabilities 

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The promotion of accountable care organizations, a crucial element in the Affordable Care Act, may result in liability risks, said H. Benjamin Harvey, MD, JD, a radiologist in the Department of Radiology at Massachusetts General Hospital, and I. Glenn Cohen, JD, Assistant Professor of Law at Harvard Law School, in a Viewpoint they published recently in the Journal of the American Medical Association (JAMA).1

The authors pointed out that the health-care delivery and payment model system of accountable care organizations is designed to limit risking medical costs while improving quality of care by agreeing to share the financial risk of health-care overspending with third-party payers, such as Medicare. These shared-risk arrangements are now spreading to private insurance markets, “where they aim to dismantle the volume-driven fee-for-service revenue model,” said the authors.

Litigation Concerns

The concern is that accountable care organizations may face the same types of litigation that managed care organizations encountered in the 1990s when lawsuits were filed by their members alleging that managed care organizations negligently prioritized their financial success over the health and well-being of their members.

Managed care organizations received some immunity against such lawsuits in 2004, when the Supreme Court recognized federal preemption (ie, that federal law blocked enforcement) of these claims for employer-provided health insurance plans that are subject to the requirements in the Employee Retirement Income Security Act (ERISA).

ERISA provided managed care organizations some protection against liability by preventing second-guessing of their motivations in medical coverage decisions. However, the authors said that accountable care organizations will encounter the same type of suspicion as they try to contain health-care costs while providing good patient care, but will not have the benefit of ERISA protection since they are not covered by the law.

Balancing Cost Savings and Effective Patient Care

According to the authors, accountable care organizations can protect themselves from potential liability by purchasing managed care errors and omissions insurance and enacting self-help remedies, such as matching institutional care algorithms used for hospital admissions to published patient care guidelines or evidence-based medical studies, which would link accountable care organization policies to established standards of care.

Lobbying Congress for protection from too much liability by broadening the requirements in ERISA to include accountable care organizations could also be helpful, they wrote.

These measures could mitigate the threat of an uncertain liability environment while balancing cost savings with the most effective patient care, the authors concluded. ■


1. Harvey HB, Cohen IG: The looming threat of liability for accountable care organizations and what to do about it. JAMA. June 17, 2013 (early release online).