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Is the ACO Movement Stalling Out (Part 2)

November 21, 2013
by Gabriel Perna
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David Muhlestein

This is part two of two-part Q&A with David Muhlestein, the director of research at the Salt Lake City, Utah-based Leavitt Partners. In part one, Muhlestein discussed why accountable care organization (ACO) growth has stunted. The data from Leavitt showed that from the end of 2010 to the beginning of the year, the number of ACOs rose dramatically from 42 to 464. This year, thus far, it’s only gone up from 464 to 493.

Muhlestein explained that when it comes to ACOs, most organizations are in a wait-and-see mode. With the results coming back on the first wave of ACOs, he said it makes sense for organizations to wait for some proven models to adopt from. Also, he talked about the role payers have played in the slowed growth of ACOs, and how some aren’t willing to invest into IT that supports a risk-based model.

In part two of the interview, Muhlestein speaks about what the Medicare Pioneer news from over the summer means in a larger context to these numbers, what role IT has played in the slowed growth, and how HIT leaders should interpret this data. Below are excerpts from the interview.

Perna: In some regards, the idea of an ACO has to be a tough sell, when you consider the fact that some of the Medicare Pioneer ACOs have already dropped out of the program. Is the ACO movement in danger of shutting down before it has really begun?

Muhlestein: I don’t think it has that danger yet. If there are a lot of organizations that fail and lose money, it definitely could.

But right now, I would say the bigger challenge from the Pioneer ACO point of view is the administrative side of it. CMS [Centers for Medicare & Medicaid Services] has it open to anyone, so anyone can be Shared Savings or apply for the Pioneer ACO. But they have a rigid framework that they are working with, where they say, ‘These are rules; this is the data we are going to provide.’  For many of those organizations, they were getting that data months later, so it’s useless to them. It was really an administrative hurdle, particularly for those that dropped out.

All of the organizations are still involved with accountable care in some fashion, they’ve just moved to other [partnerships]. They still have interest. If they lose that interest, if there are high profile cases where they say, ‘We just can’t do this, it’s not tenable, we’re going back to straight fee-for-service,’ that could really snowball. Maybe it wouldn’t be the end of the ACO movement, but certainly would be the end of the growth.

If they lose that interest, if there are high profile cases where they say, ‘We just can’t do this, it’s not tenable, we’re going back to straight fee-for-service,’ that could really snowball.

Perna:  You mentioned the role IT investment plays on the payer side (see part 1). What role, if any, does investment into IT infrastructure play into this slowed growth from the providers’ standpoint? 

Muhlestein: Most of those moving down that pathway are willing to make an investment, but the question is what investments do they need to make? That’s the hard question. Is the most important thing to have an integrated EMR [electronic medical record] system?  Or is it add-on product, specific to population health management? Or is it data analytics, predicting which of your population will have the most needs?  

It also depends on what your focus is. If you’re focus is better managing your population, maybe the most important thing for you is an integrated EMR. If you’re only going to focus on 3 percent of your most important patients, maybe all you need is a patient portal and care coordinators that will oversee a small population of patients.

We’ve talked to a number of ACOs about what has and hasn’t worked. But it’s really hard after one year to determine if that was because of what they did or because it’s an existing trend. Going forward, we’re getting more and more data and within a year, we’ll have a good idea for a lot of organizations, the types of models that are helpful and models that don’t work as well.

Perna:  Do the regulatory mandates for meaningful use and EMR adoption play into or against the formation of ACOs? On one hand, that technology can go hand-in-hand with population health. On the other hand, it’s only one part of ACO infrastructure.

Muhlestein: I would say it helps the overall movement because people that have purchased an EMR and qualified for meaningful use, they are one step ahead. It may or may not help a specific ACO, but overall, it helps the movement. It’s not the driving factor though.

Perna:  What should health IT leaders, those who are interested in forming an ACO, take from the data you presented in the Health Affairs blog?

Total Number of ACOs over Time

Source: Leavitt Partners Center for Accountable Care Intelligence