Report: ACOs grow, covering 10% of U.S. patients
Accountable care organizations (ACOs) appear to be gaining traction in the healthcare system, covering up to 10 percent of patients, and some early adopters are successfully transforming themselves into more efficient health networks, according to a Nov. 29 report published by Oliver Wyman.
While many are enthusiastic about the potential for ACOs to reduce healthcare costs and increase healthcare quality, something that a pay-for-performance system has failed to do, ACOs appear to be progressing slowly, covering only 5 percent of Medicare beneficiaries.
However, a first glance can be deceiving: “ACOs in a remarkably short period of time have become a substantial part of American healthcare, with the potential to catalyze lasting, positive change as they begin to deliver the results they promise,” according to report authors Rick Weil and Niyum Gandhi, partners in the New York City-based consulting firm’s health and life sciences practice.
Looking solely at Medicare beneficiaries may not indicate the true reach of ACOs because non-Medicare patients also receive care from ACOs and, in the strictest sense of the term, the ACO title is designated only to those participating in bundled payment programs with the Centers for Medicare & Medicaid Services, such as the Six Physician Group Practice Transition Demonstration, the Pioneer ACO Model and the Medicare Shared Savings Program (MSSP).
Adopting a broader view of what an ACO adds 15 million non-Medicare patients in Medicare ACOs and eight to 14 million patients in non-Medicare ACOs for a total of 25 to 31 million patients in ACOs, according to the report. That’s roughly 10 percent of the population and those numbers will grow; more than 500 organizations have applied to a third round of MSSP, which begins January 2013. Even if 40 percent or so of applicants are rejected, as has been the pattern in previous rounds, the number of Medicare ACOs will double in 2013.
A trend toward higher enrollment is nice, but are ACOs accomplishing their dual objective to reduce costs and improve quality? Some commercial ACOs are, according to the report. But, while annual savings of 1.9 percent were achieved through the Blue Cross Blue Shield of Massachusetts Alternative Quality Contract, many ACOs have yet to demonstrate their ability to reduce costs and only five of the 89 organizations participating in MSSP opted for the riskier, but potentially more rewarding, contract to share in financial losses.
“This sort of incompleteness is to be expected in the early years of a complex transformation,” Weil and Gandhi wrote. “And incompleteness has not prevented some of the first commercial payer ACO arrangements from having a significant impact on medical cost trend... Successful ACOs won’t just siphon patients away from traditional providers and attract the attention of payers, employers and partner organizations. They will change the rules of the game in the regions where they operate, leading purchasers to expect lower costs, higher quality and greater patient satisfaction.”
Achieving the results that some successful pioneers have requires more than rebranding physician networks as ACOs, according to the report. Real transformation treats clinical reengineering as a top organizational priority, demonstrates accountability by identifying over- and under-utilization, puts patient at the center and requires engaging with providers in different ways. Those currently mapping the unfamiliar territory will guide others through the transformation to accountable healthcare, according to the report.
“Successful ACOs won’t just siphon patients away from traditional providers and attract the attention of payers, employers and partner organizations. They will change the rules of the game in the regions where they operate, leading purchasers to expect lower costs, higher quality and greater patient satisfaction.”
The complete report is available on the Oliver Wyman website.