Our team recently took a look at the Medicare ACO trends, and to us one thing was clear: executive teams of provider organizations should be thinking about the role that ACOs are playing in the market now more than ever. Why? Because the ACO financing model is becoming more dominant in the Medicare market-and becoming more successful at producing cost savings while taking on more risk. Our recent analysis of the Medicare ACO market found:
- In 2016, there were 8.4 million Medicare beneficiaries enrolled in ACOs, covering 14.7% of the Medicare population. This is an increase from 8% in FY 2014.
- There are now 618 Medicare ACOs. But those organizations have changed over time – at least 60 ACOs withdrew in the first three years of the demonstration, but new ACOs continue to join the program creating a net positive gain each year.
- The financial risk assumed by ACOs in on the increase-while the dominant contracting model is the more risk-limited Medicare Shared Savings Program, with 561 ACOs, there are now 57 ACOs in the risk-intensive “next generation programs.”
- ACOs are likely to stay an integral part of Medicare because they are demonstrating savings (~$1.2 billion over four years).
So where do specialty provider organizations fit into ACOs? A survey of all ACOs in 2017 found that 60% provide or contract for behavioral health services (see The 2017 ACO Survey: What Do Current Trends Tell Us About The Future Of Accountable Care? and The Current State Of Behavioral Health In ACOs). But, one third of ACOs had no formal relationships with behavioral health providers. The opportunities range from very limited specialty referrals, to fully capitaed model with integration of physical, behavioral, and social supports (see Weaving Whole-Person Health Throughout An Accountable Care Framework: The Social ACO). (For more, see these presentations from our recent executive institutes – Where Do Behavioral Health Organizations Fit In The ACO Landscape? A Review Of Emerging Accountable Care Models and ACOs & Chronic Care Management: Opportunities For Behavioral Health Organizations In Population Health Management.)
If you’re an executive of an organization serving consumers with complex needs, keeping track of the Medicare ACOs in your market is a key piece of market intelligence. We expect Medicare ACO enrollment and influence to grow, if the performance of Medicare ACOs is any indication. A couple of months back, the Centers for Medicare & Medicaid Services (CMS) released the results of the 2016 Medicare accountable care organization (ACOs) initiatives (see Shared Savings Program Accountable Care Organizations (ACO) PUF, Pioneer ACO Model and Next Generation ACO Model). In FY2016, ACOs across all the Medicare programs generated $784 billion in savings—the highest amount yet. However, at the same time, a smaller proportion of Medicare Shared Savings ACOs earned a share of the savings—only 23% of ACOs shared in a percentage of cost savings in FY2016, compared to 29% in FY 2015.
And ACOs active management of consumer care will grow because their financial risk is increasing. There are two reasons for this. The first is that the ACOs in the Medicare Shared Savings Program are going to be forced to take on a greater share of the risk or drop out of the program. Second, CMS is in the middle of implementing the Quality Payment Program, which incentivizes clinical professionals and physician groups to participate in alternative payment models where there is downside risk. There are two components to the program: the Alternate Payment Model (APM) and the Merit-Based Payment System (MIPS) (see Alternate Payment Models – Strategy Implications Of The CMS Roadmap and MACRA – Who Are The Winners & Losers?). Under the APM program, most ACOs with downside risk will automatically be eligible for a 5% increase in their Medicare fee schedule.
For more on specific ACO performance, be sure to check out our just-released market intelligence, The 2018 OPEN MINDS Medicare ACO Update: A Four-Year Trends Report. This report provides a longitudinal look at Medicare ACOs. First, a look at the evolution of Medicare ACOs over time and the six models for financing. Second, a look at the changes in Medicare ACO enrollment over time-both overall and by model. This is followed by a look at the Medicare ACOs themselves-the changing number of ACOs over time and their characteristics, including the number of participating ACOs, the savings generated, and the number of attributed beneficiaries. Lastly, we look at Medicare ACO performance over time and by model.
For more, check out these articles on the ACO landscape and how to partner with an ACO:
- How To Build Successful ACO Health Plan Partnerships
- Finding The Opportunities For Behavioral Health In ACOs
- Lessons From An Early Adopter ACO
- What Do You Bring To The Table?
- Shifting ACO Market = Shifting Strategy
- Building The ‘Next Generation’ Behavioral & Social Service ACO
- In Medicare Shared Savings Program, ACO Tenure Linked To Greater Spending Reductions
- Medicare Accountable Care Organization Results For 2016: Seeing Improvement, Transformation Takes Time
- Does Paying For Value ‘Work’?
- Medicare ACO Program Savings Are Not Tied To Preventable Hospitalizations
And for even more, join us on June 6 at The 2018 OPEN MINDS Strategy and Innovation Institute for the session, “New Contract Development: Marketing to Payers & Other Stakeholders”, led by OPEN MINDS Senior Associate Steve Ramsland, Ed.D., and featuring William G. Wood, M.D., the former National Medical Director, Medical Management, Behavioral Health, Government Business Division of Anthem, Inc.