Are ACOs Succeeding? An Update for Anesthesiologists

 

There are now more than 500 Accountable Care Organizations (ACOs) up and running in the U.S.  Since they first appeared on the health care horizon, interest in their potential to improve quality while reducing or at least holding down costs has continued to grow.  Specific approaches and strategies for shifting the quality/cost equation such as ASA’s Perioperative Surgical Home model are developing with a view toward participating in future ACOs.  How—and how well—are ACOs working as the health care system’s transition to value-based care proceeds?  Overall, the results are a mixed bag.

Of the 114 ACOs that joined Medicare’s Shared Savings Program (MSSP) in 2012, only 54 achieved savings in their first year of operations.  Still, 106 new ACOs joined the MSSP in January 2013, and another 123, covering 1.5 million patients, signed up to participate in 2014.  Many of those ACOs may have opted for the low-risk, one-sided model in which they share savings, but do not share losses, with CMS.  The organizations participating in the Pioneer ACO program, on the other hand, assume greater financial risk, and nine of the 32 Pioneer ACOs dropped out of the program during 2013 (although seven of the dropouts stayed in the MSSP).  Fewer than half (13/32) of the Pioneer ACOs were able to save enough money to share in the savings with Medicare.  (Punke H. Accountable Care Organizations:  2013 Year in Review. Becker’s Hospital Review Online, December 31, 2013.)  CMS is considering opening a second round of applications to participate in the Pioneer ACO program.

Last month a team of researchers from the Harvard School of Public Health and the Commonwealth Fund published an analysis of the ACOs that had joined either the Pioneer ACO Initiative or the MSSP through January 2013.  (Epstein AM, Jha AK, Orav EJ, Liebman DL, Audet A-MJ, Zecca MA, Guterman S. Analysis of Early Accountable Care Organizations Defines Patient, Structural, Cost, and Quality-of-Care Characteristics. Health Aff (Millwood) 2014;33(1):95-102.  doi: 10.1377/hlthaff.2013.1063.)  Analyzing data for the 123 ACOs (83 percent of the 148 originally targeted), the researchers found that:

• ACOs were more concentrated in the South.  Thirty-four percent of the 2012 cohort of CMS ACOs and 41 percent of the 2013 cohort were in the South, versus 17 percent and 18 percent in the West.
• ACO patients were relatively older: they were less likely to be younger than 65 and more likely to be older than 80, compared to non-ACO patients.  They also tended to have higher incomes and were less likely to be black or eligible for Medicaid.
• Hospital and non-hospital costs of care were lower for ACO than non-ACO patients.  Totals costs were 5.8 percent lower.
• Only 46 percent (56 out of 123) of the ACOs had one or more hospitals among their participants.  Hospitals participating in an ACO were more likely to be large, located in the Northeast or the Midwest, in an urban area, to be academic medical centers and to have a medical or cardiac ICU.
• There were no significant differences in quality, as measured by Medicare Compare process measures for four conditions:  surgical care, acute myocardial infarction, congestive heart failure and pneumonia as well as by mortality and readmission rates for the three nonsurgical conditions.

The finding that hospitals are participating in fewer than half of the Medicare ACOs was surprising to the research team.  They conjecture that “The ambulatory care providers that formed many ACOs might have been reluctant to include hospitals, which inherently experience pressure to ‘fill the beds.’”  This is consistent with the fact that since January 2013, the primary sponsors of the nearly 200 new public and private ACOs that have been formed across the country were physician groups.  (Muhlestein D. Accountable Care Growth In 2014: A Look Ahead. Health Affairs Blog, January 29, 2014, Copyright © 2014 Health Affairs by Project HOPE—The People-to-People Health Foundation, Inc.)  Anesthesiologists who are expecting their own hospitals to look toward ACO opportunities in the near future should take note and perhaps adjust the focus of their search for new value opportunities.

The majority of covered lives under accountable-care arrangements are in the private sector.  (Merrill T. ACO Criticism:  Justified or Misplaced? Leavitt Partners Blog, December 12, 2013.)  As of August 2013, the major commercial payers in the accountable care space were Aetna, with 24 ACOs, Blue Cross Blue Shield licensees, with 39-plus ACOs, Cigna, with 66 ACOs and United Healthcare, which had value-based contracts with more than 575 hospitals and which in June 2013 announced plans to double its number of accountable care contracts by 2017. 

The rates of growth of both ACOs and the number of ACO-covered lives appear to be leveling off, as demonstrated in the following chart:

David Muhlestein of Leavitt Partners finds the slowdown surprising.  He offers three explanations for the change in the rate of growth:

1. Payer reluctance to offer accountable care contracts in many markets;
2. A large proportion of the “trailblazer” organizations at the forefront of care coordination and population management are already involved in at least one type of public or private ACO contract, and
3. Other organizations that are investigating accountable care—“follower” organizations—are not prepared to accept risk yet and are waiting for a proven model to follow. 

The third explanation, the lack of a proven model, is the most significant of the three, according to Muhlestein, who points out that although  ”there is some work that evaluates initial ACOs and their approaches to managing a patient population, much less is known about whether these approaches are effective at managing risk and saving money.”  (Muhlestein D. Why Has ACO Growth Slowed?  Health Affairs Blog, October 31, 2013, Copyright © 2013 Health Affairs by Project HOPE—The People-to-People Health Foundation, Inc.)  The best available indicator of success in those areas is the renewal rate of existing ACO contracts, and the fact that 30 of the 32 Pioneer ACOs either stayed in the Pioneer ACO program or transitioned to the MSSP “provides optimism for the future of the ACO movement.”  Within the next few months, ACOs that have been operational for one to two years will decide whether to renew their contracts.  A high rate of renewal would predict higher growth rates for ACOs going forward.

Whether or not ACOs as such experience a new growth spurt, we are confident that value-based arrangements in various forms are going to be a large part of the future of anesthesia practices.