Are ACOs Working? (Part 2)

Thursday, September 1, 2016 | Larry Sobal

 

In a blog earlier this year, I asked the question, “Are ACOs transforming health care?” I concluded at that time, despite a proliferation of ACOs, the model had shown limited success thus far. Last week CMS released performance data for its Pioneer and Medicare Shared Savings ACOs that, along with some other 2016 announcements, warrant another look at where the ACO concept stands.

Looking specifically at Pioneer ACO participants, it’s important to note that only 12 organizations remained in Pioneer in 2015, which was the fourth year of the program. Of these 12 organizations, which were accountable for 461,442 beneficiaries, eight generated total savings of $37 million, while four generated losses to CMS. Regarding quality, performance improved considerably from 2014 to 2015 and across all four years of the Pioneer ACO Model. Overall quality scores for nine of the 12 Pioneer ACOs were above 90% in 2015. All 12 Pioneers improved their quality scores in the four years from 2012 to 2015 by over 21 percentage points. That’s not bad, but remember we’re talking about 12 organizations—and of the eight Pioneer ACOs that generated savings, six generated savings outside a minimum savings rate and earned shared savings.

Regarding the Shared Savings program, which was established by the Affordable Care Act, there are 433 shared savings ACOs accountable for 7.7 million beneficiaries in 49 states plus Washington D.C. Shared Savings Program ACOs generated total program savings (inclusive of all savings and losses relative to financial benchmarks) of $429 million. Of participating ACOs, 119 Shared Savings Program ACOs earned shared savings by holding spending far enough below their financial benchmarks and meeting quality standards. Eighty-three ACOs had health care costs lower than their benchmark, but did not qualify for shared savings, as they did not meet the minimum savings.

Shared Savings Program ACOs that reported quality in both 2014 and 2015 improved on 84% of the quality measures that were reported in both years. The average quality performance improved by over 15% between 2014 and 2015 for four measures: screening for risk of future falls, depression screening and follow-up, blood pressure screening and follow-up, and providing pneumonia vaccinations. Over 91% of ACOs in a second or third performance year during 2015 increased their overall quality performance score through Quality Improvement Reward points in at least one of four quality measure domains.

According to last week’s CMS results, this means over 400 Medicare ACOs generated more than $466 million in total program savings in 2015, accounting for all CMS ACO experiences. Of these, 125 qualified for shared savings payments by meeting quality performance standards and their savings threshold. The results show that more ACOs are sharing savings in 2015 compared to 2014—and that ACOs with more experience in the Pioneer ACO Model and the Medicare Shared Savings Program tend to perform better over time.  

It’s not all great news. The reality is that CMS is still paying out more in bonuses ($646 million) compared to the savings it’s earning. Because of that, I’m not sure I’m ready to proclaim the various CMS ACOs an unprecedented success, but these results show some directional promise.

Now what about commercial ACOs? As of the end of January 2016, Leavitt Partners, in partnership with the Accountable Care Learning Collaborative, had identified 838 active ACOs (see Figure 1 below) across the country, which includes CMS and private ACO models. Collectively, the count of private ACOs has grown over the past year, an increase of 12.6%, with significant growth in most population centers, but increasing activity in some rural areas.

Although ACOs are estimated to be present in 55% of local health care markets, and recent estimates suggest that more than 14% of patients receive their care from a provider that is part of an ACO, little is known about what types of private ACO contracts are being pursued with commercial payers and what types of provider organizations hold these contracts (or the performance under these contracts). We can’t draw any conclusions on whether the ACO model is or isn’t successful with private payers, but they continue to emerge in the market.

What I think we can conclude is that over the past year, the conversation around ACOs has begun to shift. ACOs have continued to grow, and ACO payment policies are evolving. Along with that, hospitals and physicians have begun to think about population-level payments as an eventuality (as opposed to just a possibility). Policy pressures will continue to encourage this transition, but there is also a growing recognition that managing a population can lead to better care for individual patients.

Furthermore, CMS legislation will entice more organizations to consider pursuing ACOs by encouraging adoption of greater risk-bearing with the Medicare Access and CHIP Reauthorization Act (MACRA). That ties physician reimbursement to one of two quality programs, one of which incentivizes participation in advanced alternative payment models. The “advanced” aspect is important, because not all of CMS's alternative payment models qualify. The ones that do qualify require real downside risk. These include tracks 2 and 3 of the Medicare Shared Savings Program, the Next Generation and Pioneer ACO programs, and a special qualification pathway for medical home models, like the Comprehensive Primary Care Plus (CPC+) program. Although payment adjustments under MACRA don’t kick in until 2019, they are based on next year’s performance (2017). For those organizations not participating in advanced payment models, penalties for poor performance will be as high as 9% by 2022.

Are ACOs working? Possibly. Are they growing—and will they continue to grow? Definitely.

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Larry Sobal is Executive Vice President of Business Development at MedAxiom. He has a 35-year background as a senior executive in medical group leadership, hospital leadership and insurance. As part of his current role, Larry consults, writes and presents on topics relevant to transforming physician practices and health systems.

 

 

 

Illustration: Lee Sauer

 

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