ACOs: Best Thing Since Sliced Bread, or Swiss Cheese?

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It may not have the zing of a best-seller’s title, but check out the latest report from the HHS OIG: Medicare Shared Savings Program Accountable Care Organizations Have Shown Potential for Reducing Spending and Improving Quality. While some coverage of the report has emphasized the $1 billion in savings the OIG identified over the first three years of the ACO program (2013-2015), the title of the report makes clear that the OIG is drawing only limited, measured, conclusions about ACO performance.

$1 billion sounds like a lot of savings until we put it in perspective: the total Medicare ACO spend for the three years studied was $168 billion — less than 10% of the total Medicare spend over that period. Even limiting ourselves to the ACO program, we see that $1 billion represents just a bit more than half a percent of the Medicare ACO spend for the study period. A rounding error. And this is before accounting for the spending undertaken by ACOs to organize themselves and by CMS to run the ACO program.

The potential for reducing spending is thus, ahem, limited. It looks somewhat better if we focus exclusively on “high-performing” ACOs, and OIG’s point is that we should learn form the high performers, and improve on what they are doing, in order to bring the full benefits of the program to all. The high performing ACOs did better, but not that much better, financially, and they also did better on quality measures. There’s more detail in the report. The key takeaways are that some ACOs did better than other ACOs and traditional FFS Medicare on reducing cost and improving quality.

ACOs did better than 80% of FFS Medicare providers on these measures:

  • Hospital Readmissions
  • Screenings for Future Fall Risk
  • Primary Care Physicians Qualifying for EHR Incentive Payment
  • Depression Screenings and Followup Plan

The difference in most cases was not dramatic, and there were some measures on which the ACOs did worse than traditional FFS Medicare providers, too (e.g., patient satisfaction / patient experience).

All in all, not a ringing endorsement of the program that so many of us thought would represent a significant improvement in managing cost and quality of health care services for Medicare beneficiaries.

A recent positive self-evaluation of one ACO’s experience has come under fire for not being quite so dispassionate.

Could greater transparency and closer to real-time reporting lead to better outcomes? Some interested parties believe that they are important must-haves, for ACOs and for other CMS quality incentive payment initiatives.

While the OIG seems to be urging CMS and the provider community to learn from high-performing ACOs and build upon modest successes, CMS (directed by a surgeon at the helm of HHS) seems intent on rolling back bundled payment initiatives that were due to be implemented by CMMI come January. (Price is opposed to expanding bundled payments even though some studies show their benefits.)

It is a trying time for provider organizations to do business with CMS. Even a company founded by a former HHS official now helping physician organizations run ACOs, while pursuing innovative care management strategies, has not been able to bring those ACOs into gainsharing territory.

Will the big bet on ACOs prove to be misplaced? Will ACOs be sunk by the lack of patient lock-in, high administrative costs, or inability to do a better job of reducing costs and improving quality? How much longer to we have to observe the market before making a decision to turn our focus elsewhere? Will Congress ever be able to make a “surgical strike” amending the ACA to remove ACOs from their vaunted position as an innovation project mandated by statute? Or will ACOs pull through and yield the benefits hoped for by their designers and advocates?

Stay tuned.

David Harlow

The Harlow Group LLC

Health Care Law and Consulting

Image credit: John Verive via Flickr CC

You should follow me on Twitter: @healthblawg

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