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Growth And Dispersion Of Accountable Care Organizations In 2015

March 31st, 2015

Beginning this January, an additional 89 provider organizations joined the Medicare Shared Savings Program (MSSP) as accountable care organizations (ACOs). While this year’s new entrants are a smaller cohort than those that joined in 2013 and 2014, they represent a continuation of the expansion of the accountable care movement. The recent Department of Health and Human Services (HHS) announcement of its goal to move fifty percent of Medicare payments to alternative payment models (including ACO-based arrangements) indicates the government’s strong backing of the model and, coupled with continuing endorsement of the approach from state Medicaid programs and commercial insurers, there is strong support for this care delivery approach to continue.

In an ACO, health care providers accept responsibility for the cost and quality of care for a defined population. Each ACO’s laudable goal is to achieve what Don Berwick has called the “triple aim” — to improve quality, increase patient satisfaction, and lower costs. The key to reaching those goals is to change how providers are paid, based on reaching certain cost and quality benchmarks. In effect, the objective is to change incentives so that it is in providers’ best interest to maximize health, rather than focus on increasing the volume of services rendered.

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ACO Quality Results: Good But Not Great

December 18th, 2014

On September 23, 2014, the Centers for Medicare and Medicaid Services (CMS) released Year 1 Quality Performance results for Accountable Care Organizations (ACOs) that began participating in the Medicare Shared Savings Program (MSSP) in 2012 or 2013. Another report, released shortly before, outlined financial performance of the ACOs and showed that only 49 ACOs, or 22 percent of those ACOs, qualified for shared savings payments by successfully reducing total spending.

Opportunity for continued quality improvement aside, a troublesome snag for the program could be a very low correlation between improved quality and earned savings: our analysis shows that, in performance year one, improved quality and earned savings only correlate at 8.6 percent, so low that it is statistically insignificant (Figure 1).

In practice, this means that better quality is not associated with better financial results. Twenty-one of the 49 ACOs that did earn shared savings actually scored below the average quality of the group. For the first year, quality outcomes did not affect the size of shared savings payments, but in future years ACOs that perform poorly on quality measures will lose a portion of any shared savings.

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ACO Results: What We Know So Far

May 30th, 2014

Editor’s note: For more on this topic, stay tuned for the upcoming June issue of Health Affairs, which features a series of articles on accountable care organizations. 

Accountable care is a relatively recent addition to the health care vernacular, but its roots can be traced to the decades-long effort to coordinate medical care. In the United States, health care has evolved into a fragmented pay-for-volume system which has both driven up cost and decreased quality. Coordination of care is meant to reverse this trend. Through such solutions as Health Management Organizations (HMOs), Integrated Delivery Networks (IDNs) and now Accountable Care Organizations (ACOs), policymakers, providers and payers have sought to consolidate and coordinate patient care.

Contemporary care coordination efforts focus on accountable care which increases provider accountability for the cost and quality of care. The driving principle behind the formation of ACOs is the Institute for Healthcare Improvement’s triple aim: improving the patient experience of care, improving the health of populations and reducing the per capita cost of health care.

One of the broadest applications of this concept is the creation of Medicare ACOs under the Patient Protection and Affordable Care Act. This includes the Pioneer ACO Program and the Medicare Shared Savings Program. More recently, states have also pursued ACO contracts to cover Medicaid populations. In the private sector, providers have forged ACO contracts with commercial payers. At the close of 2010, only 41 preliminary Accountable Care Organizations existed. The number of ACOs more than tripled to 138 a year after the passage of the PPACA. By 2012 the number nearly tripled again, and by the end of 2013 more than 600 ACOs were operating across the U.S.

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Medicare ACOs: Mixed Initial Results And Cautious Optimism

February 4th, 2014

Editor’s note: For more from David Muhlestein on the accountable care organization landscape, see his recent post “Accountable Care Growth In 2014: A Look Ahead.”

Active followers of health policy have eagerly awaited the outcome of the early Medicare Accountable Care Organizations, which could indicate how the overall accountable care movement is progressing. On January 30, the Centers for Medicare and Medicaid Services released preliminary financial data for the first two rounds of the Medicare Shared Savings Program (MSSP) with mixed results. Of the 114 ACOs in the program, only 54 of the ACOs saved money and only 29 of those saved enough money to receive bonus payments. While the 54 ACOs that saved money accounted for a net savings of $128 million for Medicare, it’s uncertain if those savings were offset by any losses from the remaining organizations. Overall, the results were similar to last year’s Pioneer ACO results.

These preliminary results are interesting but are notably incomplete. There is still much to learn about how individual organizations did, what the overall effect was for the Shared Savings Program and how this will affect the program going forward. There are, though, some key takeaways that can be garnered from this release.

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Accountable Care Growth In 2014: A Look Ahead

January 29th, 2014

On December 23, 2014, the Centers for Medicare and Medicaid Services announced 123 new Medicare Shared Savings Program (MSSP) Accountable Care Organizations (ACOs).  This represents the fourth round of MSSP participants, which, coupled with the Pioneer ACOs, brings the number of Medicare ACOs to 366.  Some of these organizations were already known to be ACOs, including those that transferred from the Pioneer ACO program, but many were new to accountable care, bringing the total number of public and private ACOs to 606.

With continued government support of ACOs and considerable growth in the number of organizations becoming ACOs, the prospect of ACOs becoming a dominant model in care delivery seems very real.  In this post I will evaluate how the accountable care movement has grown and suggest what industry observers should look for in 2014.

Overview of Accountable Care Organizations

An accountable care organization, at its most basic level, is a group of health care providers that accept responsibility to care for the health needs of a defined population while meeting predetermined quality benchmarks.  The specific goals of ACOs are to improve quality outcomes, improve the experience of care, and lower costs.  Without conveying all the details of what that definition includes, it is important to recognize that the definition is relatively broad; it includes multiple types of organizations operating under many different payment arrangements.  While the MSSP is the most publicized incarnation of ACOs, many other public and private models exist, with many different approaches to achieving the common goals.

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Why Has ACO Growth Slowed?

October 31st, 2013

Both public and private organizations have been aggressively pursuing Accountable Care Organizations (ACOs) as a way to improve health care outcomes, lower health care costs and improve patient satisfaction with care. With substantive industry interest and popular media coverage, the success or failure of ACOs at achieving their goals has significant implications for the American health care system.

I lead a team that is actively tracking, studying and interviewing organizations that are engaged in a variety of accountable care contracts. We estimate that the number of ACOs has grown from a few dozen at the end of 2010 to nearly 500 as of the end of September 2013. After significant growth through the end of January of this year, only 35 new ACOs have been announced (see Chart 1).

Coupled with the slower growth in the total number of ACOs, there has been slower growth in the number of lives covered by ACO arrangements. We estimate an increase of less than 3 million covered lives in all of 2013, from 17.4 million lives in December 2012 to 20.1 million through the end of September (see Chart 2), and that includes the 106 CMS ACOs announced in January. This recent slowed growth has raised the question of what this means for the accountable care movement.

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What Types Of Hospitals Have High Charge-To-Reimbursement Ratios?

July 15th, 2013

Recently, the Centers for Medicare & Medicaid Services (CMS) released the average value of hospital billed charges and their corresponding Medicare reimbursed rates for the 100 most common diagnosis related groups (DRGs). The release included data for each Medicare-eligible hospital with eleven or more discharges for the specific DRG in the year 2011. This represents information on 3,337 different hospitals with an average of 48.9 different DRGs (SD=31.3) per institution. On average, hospitals billed Medicare 3.77 times (standard deviation = 1.83) what they were actually reimbursed, with a range of 0.42 to 16.23.

While the difference between charges and reimbursement rates is well known, little has been written about the characteristics of hospitals associated with these factors. This post evaluates hospital characteristics as they relate to higher charged rates compared to actual reimbursed rates for the Medicare population. Hospitals that charge more tend to be affiliated with a hospital system, located in urban areas, and investor-owned, while hospitals that charge less tend to be small, unaffiliated, government-owned entities located in rural areas.

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Continued Growth Of Public And Private Accountable Care Organizations

February 19th, 2013

On January 10, 2013 the Centers for Medicare & Medicaid Services (CMS) announced that 106 Accountable Care Organizations (ACOs) will join the Medicare Shared Savings Program (MSSP). CMS reports that this brings the total number of MSSP ACOs to “more than 250” and that they cover up to 4 million Medicare beneficiaries.

These new Medicare ACOs, though, only tell part of the accountable care story. ACO growth has also continued apart from the Medicare program with 428 total ACOs now existing in 49 states. Additionally, physician groups have overtaken hospital systems and have now become the largest backer of ACOs.

Background Of The ACO Program

Public sector. ACOs are health care entities intended to lower health care costs, improve quality outcomes and improve the experience of care. The premise of the ACO is that each of these results can be obtained by moving away from volume-driven fee-for-service based reimbursement toward payment models that reward care coordination and quality outcomes.

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