Executive Briefing | by Monica E. Oss | November 2, 2016
Last month, my colleague Athena Mandros did a great job at laying out what “success” looks like for Medicare accountable care organization (ACO) programs (see Who Are The ‘Big Winners’ Of Medicare ACO Bonus Payments?). The success of ACOs operating under The Centers for Medicare & Medicaid Services (CMS) Medicare Shared Savings Program (MSSP) has gotten a lot of press this year, especially considering the Centers for Medicare & Medicaid Services (CMS) announcement that the MSSP and the Pioneer Accountable Care Organization Model produced a combined $1.29 billion in total Medicare savings since 2012 (see Physicians and health care providers continue to improve quality of care, lower costs).
But while those numbers are a positive, the challenges for succeeding as an ACO continue, with more ACOs struggling to stay “above average” in a highly competitive field. Shortly after the results were released, director of the Harvard Global Health Institute, Ashish Jha M.D., took a closer look at the numbers (see ACO Winners and Losers: a quick take) and pointed out a couple metrics that may have been missed in those headlines:
This year’s results show that only 119 (27%) of the MSSP ACOs received a share of the savings generated for a total of $466 million in shared savings payments. While that is more than in 2014 (92 ACOs for $341 million) and 2013 (52 ACOs for $315 million), it is still a small proportion of the ACOs that are participating. How big a threat this is to the Medicare ACO programs, or the concept of ACOs overall, remains to be seen. But the National Association of ACOs voiced its concerns in 2015 (see National Association of ACOs Comments on Medicare Second Year ACO Results), noting:
Hundreds of organizations with thousands of doctors, hospitals and other health care providers have invested over $1.5 billion of their money in the ACO program to date but they have received only $656 million total in return… This is not a sustainable business model for the long-term future.
To address the ACO sustainability issue, the National Association of ACOs offered five suggestions for CMS that include:
Add to this the comments of one of the nation’s biggest proponents for ACOs and one of the designers of the Patient Protection & Affordable Care Act, Ezekiel Emanuel M.D. He noted in a 2015 op-ed that programs like the MSSP:
…rewards organizations for underspending but does not penalize them for excessive spending—the number of new participants is falling, and more than half of the participants are now deciding whether to renew. The fundamental problem with a voluntary program is that to attract participants, Medicare needs to make it easy for the ACO to be rewarded. Paradoxically, this makes it hard to achieve substantial savings (see The Coming Shock in Health-Care Cost Increases).
The demise of some ACOs is inevitable – like the demise of some health insuring organizations and some health systems. In this disruptive shift to value-based reimbursement, the requirements are monumental and the competition is mighty. But, for the ACO group that is “above average” there are rewards (see The Problem With Risk – Not Everyone Can Be Above Average and Is Value-Based Reimbursement Really Here? It’s Hard To Tell), and those systems will thrive.
In the meantime, it’s important to pay close attention to the costs and performance of today’s ACOs. For more on the ACO landscape, be sure to check out the OPEN MINDS market intelligence report, The 2016 OPEN MINDS Medicare ACO Update: A Three-Year Trends Report, which provides a three-year look back on Medicare ACO performance and compares the results, including a list of the top 10 ACO performers across the country.