5 Things to Know About Accountable Care Organizations

This week, The American Journal of Managed Care was in Palm Harbor, Florida, hosting the fall live meeting of its ACO and Emerging Healthcare Delivery Coalition, where stakeholders from across the healthcare industry discussed best practices. As the country moves from volume to value, accountable care organizations (ACOs) can play a key role during the transition from fee-for-service. However, ACOs not only remain largely a mystery to the average consumer, but also to providers who may be part of an organization participating in an ACO. Here’s what you need to know about ACOs:

1. ACOs are older than the Affordable Care Act. At least, the theory of ACOs is older. While the inclusion of ACOs in the health reform law has accelerated adoption of the delivery model, the term “accountable care organization” was first coined in 2006 by Elliott Fisher, MD, director of the Dartmouth Institute for Health Policy and Clinical Practice.

2. There are multiple models established by CMS. There are a number of different ACO models being offered by CMS. The most common model is the Medicare Shared Savings Program (MSSP), which has 404 ACOs and is accepting more. The Pioneer ACO Model is for healthcare organizations and providers already experienced in coordinating care, and while it started with 32 ACOs, just 19 remain today. The Advance Payment ACO Model is designed for physician-based and rural providers. And the newest model is the Next Generation ACO, which takes on greater performance risk with potentially greater rewards. The Next Generation ACO model is currently accepting applications.

3. Results have been mixed. So how have the ACOs in Medicare’s programs been performing? Well results have been mixed. In the third year of the program, 2014, most ACOs did not quality for shared savings, according to results released by CMS. The Pioneer program generated savings of $120 million, with 15 of the 19 achieving savings, but only 11 qualifying for bonuses. In the MSSP, 92 of the 333 participants received bonuses, while 89 reduced costs but fell short of the target to receive a bonus payment. What the results did show was that experience makes all the difference. Those ACOs with more years in the program were more likely to be eligible for bonuses. The 2014 results have shown that population health and the ACO model are paying off, but over the long term, pointed out Aledade’s Travis Broome, MPH, MBA.

4. How they’re paid. Participants are eligible receive additional payments, or bonuses, based on meeting specified quality and savings requirement through the ACO. Medicare rewards ACOs that lower their growth in healthcare costs while meeting performance standards. The point of the ACO programs is to transition away from fee-for-service to a landscape that pays providers based on quality, rather than quantity of care. In the MSSP, ACOs can chose either the one-sided or the 2-sided model: in the former, the ACO shares in savings for the first 2 years and savings or losses in the third year; and in the latter model, the ACO shares in savings and losses for all 3 years. The Pioneers have higher levels of shared savings and risk than those in the MSSP and in the third year of the program, Pioneer ACOs with a specified level of savings in the first 2 years are eligible to move to a population-based model.

5. This is just the beginning. As Risa Lavizzo-Mourey, MD, MBA, president and chief executive officer of The Robert Wood Johnson Foundation, wrote in her special guest commentary for The American Journal of Managed Care, while there were only 64 ACOs at the end of 2011, the number had increased sharply to 744 at the beginning of 2015. That’s a 1000% increase in roughly 3 years. Dr Lavizzo-Mourey only expects the number of ACOs to increase thanks to the government-sponsored models.

And if you’re interested in ACOs and emerging healthcare delivery models, you can learn more with AJMC’s ACO Coalition, which provides an engaging and interactive learning environment regarding current and evolving healthcare delivery models. The Coalition holds 2 live meetings a year and 3 online WebEx meetings.