An article published late last month in the Health Affairs Blog offers very compelling reading for anyone interested in the ongoing evolution of accountable care organizations (ACOs). Authored by David Muhlestein, Ph.D. (senior director of research and development at Leavitt Partners) and Mark McClellan, M.D., Ph.D. (director of the Robert J. Margolis Center for Health Policy at Duke University, and former administrator of the Centers for Medicare & Medicaid Services), the Apr. 21 article, entitled “Accountable Care Organizations In 2016: Private And Public-Sector Growth And Dispersion,” provides a wealth of data and a fair amount of intriguing analysis.
As Muhlestein and McClellan note at the outset of their article, “As of the end of January 2016, Leavitt Partners, in partnership with the Accountable Care Learning Collaborative, has identified 838 active Accountable Care Organizations across the country with service areas in all 50 states and the District of Columbia. Collectively,” they write, “the count of ACOs has grown by 94 over the past year, an increase of 12.6 percent. Growth has continued to vary across the country and across public and private health insurance programs, with significant growth in most population centers but increasing activity in some rural areas.” What’s more, they noted, “In addition to the increase in ACOs, the number of accountable care contracts has continued to growth, with 1,217 identified accountable care contracts.”
Significantly, the article’s authors note, Leavitt Partners estimates that fully 28.3 million people living in the United States are now covered by an ACO arrangement.
Now, here’s where things start to get interesting. As the authors note, “One important indication of the success of the early ACO initiatives is how many renew their contracts when they have the option of leaving an accountable care program. Of the 220 Medicare ACOs that were eligible for renewal, 147 renewed in the MSSP, eight transitioned to the Next Generation ACO program, and an additional 10 combined or merged with other ACOs. Collectively, three-fourths of the early Medicare ACOs are continuing onward with a Medicare ACO program. In addition, a number of those that have left the Medicare program continue to have commercial ACO contracts, indicating that ACO policy refinements may further increase participation.”
Those statistics are significant, particularly in light of the intense publicity that has accompanied the high-profile departures from some of the Medicare ACO programs, most particularly the Next Generation ACO Program (which has lost half of the participants that started in the program a few years ago, but whose overall roster was always small compared to that of the MSSP). As the authors note, “Fully adopting accountable care and successfully transforming a practice to achieve savings is difficult, with mixed results among participants. Many ACOs have not succeeded, and it is likely that more ACOs will ultimately be unsuccessful at making this transition,” they predict. “Other ACOs will likely drop out of government and commercial contracts in the future. But knowledge about how to succeed as an ACO will continue to increase, and organizations that dropped out will have the opportunity to try again in the future in modified ACO programs. Thus, many organizations will iterate as they learn how to make their transition to accountable care.”
And that piece of the authors’ analysis is particularly relevant, given the outsized influence of the Medicare ACO programs on ACO development overall, including on the evolution of private-insurer ACO contracting arrangements. They note that the Medicare ACO programs have been the major contributor to the progress that the Department of Health and Human Services (HHS) has seen in the direction of fulfilling its stated goal of moving 50 percent of Medicare payments towards risk by 2018.
The authors also state that they believe that HHS’s announcement of the Comprehensive Care for Joint Replacement (CJR) program, which will require hospitals in 67 geographic markets to accept financial risk for hip and knee replacements as part of its mandatory 90-day bundling program, will further accelerate participation in Medicare ACOs; and that they believe that the requirement under the MACRA (Medicare Access and CHIP Reauthorization Act of 2015) law that requires physicians to participate either in an alternative payment model or in the MIPS (Merit-based Incentive Payment Program) will add to the acceleration of ACO development.
All of these elements make sense to me as aspects of trends that are moving accountable care forward. Yes, the authors state, the progress has been and continues to be, very uneven, noting that “High penetration may be driven by competition among multiple providers within a market who are all adopting accountable care contracts, or it can be driven by a single ACO run by a dominant provider that is able to take risk for a large portion of the population.” What’s more, they note, “States that have adopted Medicaid ACOs, such as Oregon, also tend to have higher penetration.”
So two things ultimately seem clear. One, ACO development will continue to vary considerably in terms of the intensity of its penetration across diverse local and regional healthcare markets, depending, not surprisingly, on a large number of factors within each individual local or regional market. At the same time, as the authors note, the general trend is unmistakable: ACOs are here to stay—not as the only alternative payment model, or even perhaps as the most dominant one—but rather, as a dominant model among others, and one that is producing ripple effects across the U.S. healthcare system.
It is always good to access sober, thoughtful analysis of the trajectories of complex phenomena like ACO development, from industry observers like Muhlestein and McClellan. And it will continue to be valuable to digest further commentary like theirs as the phenomenon wends its way forward in the coming months and years, because the ACO phenomenon—and I’m speaking of both Medicare and commercial ACO entities and contracts now—is going to continue to wend its way forward elliptically and rather diagonally, as so very many phenomena do in U.S. healthcare. And the implications of that journey will inevitably ripple outwards to touch so many other aspects of healthcare in our inevitably tremendously complex healthcare system.