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Growth And Dispersion Of Accountable Care Organizations In 2015
Posted By David Muhlestein On March 31, 2015 @ 9:00 am
In January, an additional 89 provider organizations [1] joined the Medicare Shared Savings Program [2] (MSSP) as
accountable care organizations (ACOs). While this yearfs new entrants are a
smaller cohort than those that joined in 2013 [3] and 2014 [4], they represent a continuation of the
expansion of the accountable care movement.
The recent Department of Health and Human Services (HHS) announcement [5] of its goal to move
50 percent of Medicare payments to alternative payment models (including
ACO-based arrangements) indicates the governmentfs strong backing of the model
and, coupled with continuing endorsement of the approach from state Medicaid programs [6] and commercial insurers [7], there is strong support
for this care delivery approach to continue.
In an ACO, health care providers accept responsibility for the cost and
quality of care for a defined population. Each ACOfs laudable goal is to achieve
what Don Berwick has called the gtriple aim [8]h — to improve quality, increase
patient satisfaction, and lower costs. The key to reaching those goals is to
change how providers are paid, based on reaching certain cost and quality
benchmarks. In effect, the objective is to change incentives so that it is in
providersf best interest to maximize health, rather than focus on increasing the
volume of services rendered.
ACO Growth
Leavitt
Partners [9] has been actively tracking ACOs since 2010 [10], maintaining a database that is
updated regularly from publicly available information and personal and industry
interviews. Over the past year, approximately 120 organizations have become ACOs
in public and private programs, bringing the total to 744 since 2011 (Figure 1).
The historical ACO growth data shown in Figure 1 are slightly different from our
past estimates, as they are now based on the start date of the ACOfs contract,
not on when the ACO was announced.
For example, the 89 ACOs announced in December 2014 are listed as beginning
in January 2015, which is the start of their contract. Regardless of how many
contracts an ACO is engaged in, both public and private, an ACO is counted only
once. Note that some of the new Medicare Shared Savings Program participants
already had commercial contracts, and are thus tracked beginning at the start of
their first contract.
Figure 1. Total Public and Private Accountable Care
Organizations, 2011 to January 2015
[11]
Source: Leavitt Partners Center for Accountable Care
Intelligence
In addition to growth in the total number of ACOs, there has been continued
growth in the number of people covered by ACO arrangements. Since the start of
2014, an estimated 4.5 million more people have been included in accountable
care arrangements, bringing the total to 23.5 million covered ACO lives (Figure
2). Of these, only 7.8 million [1] are part of the Medicare ACO
programs (Pioneer and Medicare Shared Savings Program), meaning that the
majority of ACO volume is coming from the commercial and Medicaid sectors.
Figure 2. Number of ACO Covered Lives, 2011 to January
2015
[12]
Source: Leavitt Partners Center for Accountable Care
Intelligence
ACO Dispersion
The geographic distribution of ACOs has continued to expand as ACOs have
begun to form in more markets and to expand within markets. Accountable care
organizations exist in all 50 states, Washington, D.C., and Puerto Rico, with
the number of ACOs strongly correlated with the population (rs=.895,
p<.001). California has the most ACOs with 81, followed by Florida with 66
and Texas with 48.
When evaluating ACOs at the Hospital Referral Region (HRR) level, there is
still a strong correlation between ACO prevalence and population, though the
relationship is not as strong (rs=.645, p<.001). ACOs now exist in
272 of the 306 HRRs and Puerto Rico. Figures 3 and 4 show counts of ACOs by
state and by Hospital Referral Region, respectively. It is important to note
that there are still many regions of the country where there is negligible ACO
activity.
Figure 3. Number of ACOs by State, January 2015
[13]
Source: Leavitt Partners Center for Accountable Care
Intelligence
Figure 4. Number of ACOs by Hospital Referral
Region, January 2015
[14]
Source: Leavitt Partners Center for Accountable Care
Intelligence
Looking at the market penetration of ACOs is a different story, as high
population centers may have high numbers of ACOs, but relatively low total
penetration of ACO enrollment as a percentage of state population. Figures 5 and
6 show the estimated percent [15] of the entire population
within a state or Hospital Referral Region that is covered by an ACO. Market
penetration is highest in markets where there are multiple providers
participating in ACOs, such as in Oregon, which has moved its Medicaid
population into accountable care programs, or in regions where a dominant
provider has become an ACO.
Figure 5. Estimated Percent of Population Covered by an ACO, by
State, January 2015
[16]
Source: Leavitt Partners Center for Accountable Care
Intelligence
Figure 6. Estimated Percent of Population Covered by an ACO, by
Hospital Referral Region, January 2015
[17]
Source: Leavitt Partners Center for Accountable Care
Intelligence
Growth In The Number Of ACO Contracts
The growth in the total number of ACOs and the number of covered lives only
tells part of the story. Organizations that have found success with a pilot
program are well-positioned to expand their patient population, and recently,
ACOs have increasingly expanded the number of contracts under which they are
operating. For example, in 2011, 85 percent of ACO contracts were the
organizationfs first contract. By 2014, only 59 percent of the contracts were
first contracts (Figure 7). As of January 2015, 26 percent (192/744) of ACOs had
more than one accountable care contract, and 10 percent (73/744) had three or
more contracts. Overall, there are 1,046 known contracts for 744 ACOs.
Figure 7. New Accountable Care Contracts by Year
[18]Source: Leavitt Partners Center
for Accountable Care Intelligence
Payer Involvement
The involvement of different payers has also continued to increase over the
past year. Through January 2015, 132 different payers have entered into at least
one accountable care contract, an increase of 26 since the end of 2013 (Figure
8). These include Medicare, over a dozen state Medicaid plans, regional
insurers, all of the large, national carriers, and some large, self-insured
employers. Commercial payers—most notably Cigna, UnitedHealth, and Aetna—have
significantly expanded their involvement in ACOs, with promise of more to come
in 2015.
Figure 8. Number of Payers Participating in Accountable Care, 2011 to
January 2015
[19]
Source: Leavitt Partners Center for Accountable Care
Intelligence
Things To Watch In 2015
The accountable care movement has grown steadily over the past few years.
However, 2015 will be pivotal as to whether the ACO model will move from a
series of exploratory programs toward mainstream adoption across the country.
During 2015, observers should pay close attention to several factors that will
directly impact the overall trajectory of the movement.
Changes to the MSSP. The Medicare Shared
Savings Program is nearing the end of its initial performance period and is
expected to make some significant changes to the program. The proposed rules released in December 2014 [20] suggest substantive
potential changes, including modifying when providers must move toward two-sided
risk and how patients are attributed to ACOs. Many commenters [21] have aspects of the proposed
changes, but the true impact will be felt only when the final rules are released
and subsequently implemented in the next agreement period.
A requirement that forces ACOs to bear two-sided risk before they feel
prepared could lead to a mass exodus from the voluntary program. Such a result
would discourage providers currently considering joining the program and could
significantly stymie the progress of government-backed ACOs. The proposed rules,
though, suggest that CMS may be more flexible with this requirement and allow
continued participation with one-sided-only risk, which may keep existing
participants in the program and continue to entice new enrollees.
In addition to changes to the Medicare Shared Savings Program, the newest
initiative from the Center for Medicare & Medicaid Innovation, the Next Generation ACO Model [22], suggests how the
Medicare ACO models may evolve. The Next Generation model allows providers to
assume higher levels of financial risk for greater rewards than are available
under the current Pioneer and MSSP models, with the possibility of eventually
accepting capitated payments. With Medicare offering multiple programs,
organizations that are prepared to increase financial risk may do so through the
Next Generation Model, but those that are still learning can continue
participation in the lower-risk MSSP.
The HHS Goal. The Department of Health and Human
Services has set a goal of moving 50 percent of payments toward alternative models by 2018
[5], creating the potential to significantly accelerate the movement.
Even with government action, though, the transition toward accountable care will
not be immediate, as providers continue to experiment with different approaches
to managing the health of populations and learn what works in practice within
their unique organizations. The 2018 goal is ambitious, but whether it is
reached will largely depend on the details of the program. A particular
challenge will be to jumpstart growth in regions of the country that have yet to
see any interest from providers in participating in accountable care
arrangements.
Expansion of Medicaid ACOs. Medicaid ACOs have
grown significantly over the past year, and 16 states have now passed ACO
legislation or have enacted ACO-like pilot programs. These states, including
Alabama, Vermont, Oregon, and New Jersey, represent a variety of different
approaches — ranging from capitated payments to payments closely mimicking the
MSSP. Because of the large size of Medicaid programs and statesf ability to
mandate payment models, states can accelerate the regional growth of ACOs if and
when they decide to move toward accountable care.
Organizational Infrastructure is Key to Success.
Much of the policy conversation around accountable care has
focused on payment models. While it is certain that payment models do incent
behavior, adopting a payment model does not guarantee that a provider will be
able to transform the practice of care in a way that improves outcomes and
lowers cost. Organizational transformation is always difficult, and health care
transformation is no exception.
A myopic policy focus on payment ignores the core objective of accountable
care, which is to improve the delivery of care, not simply change how providers
are paid. Only if successful care delivery models are identified, shared, and
made replicable for a broad variety of provider types will ACOs succeed. Public
and private payers who are experimenting with ACOs need to identify pathways to
success that reflect the variety of providers [23] that are engaging in
accountable care and recognize that there is no single approach that will work
for all ACOs.
Predicted ACO Growth
Predicting the future of ACO growth is an inexact science that depends on
countless factors (including those described above), ranging from government
action to future technological innovation to the early success of specific
organizations. Recognizing this uncertainty, many people still wonder what the
future growth of ACOs may entail. Figure 9 illustrates our gbest guessh
projection of the future growth of accountable care over the next five years. We
predict that ACOs will cover over 70 million people by the beginning of 2020,
and more than 150 million people in 2025. Worst-case scenario models see ACOs
decreasing in size within two years, and best-case scenarios put the majority of
Americans into ACOs by 2018.
Figure 9. Estimated Future Growth of Lives Covered by
ACOs
[24]
Source: Authorfs Analysis
Observations
In the past year, there have been an increasing number of assessments of
early ACOs, covering the success of MSSP participants (cost [25], quality [26], and regional factors [27]), individual commercial programs [28], and broad overviews [29] of all ACOs. The consensus is that
the outcomes are mixed, which is to be expected when so many different
organizations are trying to accomplish the same goals but in very different
ways.
From my work over the past year, I have come to three important takeaways
regarding the ACO movement. First, it takes considerable time and managerial
resources to become a full-fledged ACO. While many organizations have failed to
date to fully realize all of the goals of accountable care, many have made
significant progress in transforming how they deliver care. However, a full
transformation cannot be realized in just a year or two. Early findings are
interesting and relevant but donft help us predict whether any particular ACO
will be successful in the long term.
Second, providers in ACOs are still optimistic that they will be able to
learn how to effectively care for defined populations. There are now replicable,
successful models to emulate. Overall, very few organizations that have become
ACOs have subsequently abandoned the model. The most public example is the
Pioneer ACO Program, where 13 of 32 ACOs have chosen to leave [30] that program, but all have either
transitioned to the MSSP program or continued with another, non-Medicare ACO
arrangement.
Third, the best way to manage a population differs based on structural
characteristics of the provider organization. Accountable care organizations
range from relatively small, primary-care physician groups to large, multi-state
integrated delivery networks. Such disparate organizations [23] have different
capabilities, different needs, and different opportunities. There are many
pathways that organizations can take to effectively bear risk, but shorter-term
success is more likely to be achieved by focusing on maximizing what the
organization has the ability to do well, as opposed to trying to develop new
capacities.
Article printed from Health Affairs Blog: http://healthaffairs.org/blog
URL to article: http://healthaffairs.org/blog/2015/03/31/growth-and-dispersion-of-accountable-care-organizations-in-2015-2/
URLs in this post:
[1] 89 provider organizations: http://blog.cms.gov/2014/12/22/acos-moving-ahead/
[2] Medicare Shared Savings Program: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/sharedsavingsprogram/index.html?redirect=/SharedSavingsProgram/
[3] 2013: http://healthaffairs.org/blog/2013/02/19/continued-growth-of-public-and-private-accountable-care-organizations/
[4] 2014: http://healthaffairs.org/blog/2014/01/29/accountable-care-growth-in-2014-a-look-ahead/
[5] announcement: http://www.hhs.gov/news/press/2015pres/01/20150126a.html
[6] Medicaid programs: http://www.modernhealthcare.com/article/20140701/NEWS/307019965
[7] commercial insurers: http://aishealth.com/archive/nhpw020215-02
[8] triple aim: http://content.healthaffairs.org/content/27/3/759.full
[9] Leavitt Partners: http://leavittpartners.com/accountable-care/
[10] since 2010: http://leavittpartners.com/wp-content/uploads/2011/11/2011-11-Growth-and-Dispersion-of-Accountable-Care-Organizations.pdf
[11] Image: http://healthaffairs.org/blog/wp-content/uploads/Muhlenstien-Exhibit-1.jpg
[12] Image: http://healthaffairs.org/blog/wp-content/uploads/Muhlenstien-Exhibit-2.jpg
[13] Image: http://healthaffairs.org/blog/wp-content/uploads/Muhlenstein-Exhibit-3.jpg
[14] Image: http://healthaffairs.org/blog/wp-content/uploads/Muhlenstein-Exhibit-4.jpg
[15] estimated percent: http://leavittpartners.com/wp-content/uploads/2015/01/2013-12-Geographic-Distribution-of-ACO-Covered-Lives1.pdf
[16] Image: http://healthaffairs.org/blog/wp-content/uploads/Muhlestein-Exhibit-51.jpg
[17] Image: http://healthaffairs.org/blog/wp-content/uploads/Muhlestein-Exhibit-6.jpg
[18] Image: http://healthaffairs.org/blog/wp-content/uploads/Muhlestein-Exhibit-7.jpg
[19] Image: http://healthaffairs.org/blog/wp-content/uploads/Muhlestein-Exhibit-8.jpg
[20] released in December 2014: https://www.federalregister.gov/articles/2014/12/08/2014-28388/medicare-program-medicare-shared-savings-program-accountable-care-organizations
[21] commenters: http://www.regulations.gov/#!docketBrowser;rpp=50;po=0;dct=PS;D=CMS-2014-0155;refD=CMS-2014-0155-0002
[22] Next Generation ACO Model: http://www.hhs.gov/news/press/2015pres/03/20150310b.html
[23] variety of providers: http://leavittpartners.com/wp-content/uploads/2015/01/2014-06-A-Taxonomy-of-Accountable-Care-Organizations-Different-Approaches-to-Achieve-the-Triple-Aim1.pdf
[24] Image: http://healthaffairs.org/blog/wp-content/uploads/Muhlestein-Exhibit-9.jpg
[25] cost: http://healthaffairs.org/blog/2015/01/22/early-evidence-on-medicare-acos-and-next-steps-for-the-medicare-aco-program/
[26] quality: http://healthaffairs.org/blog/2014/12/18/aco-quality-results-good-but-not-great/
[27] regional factors: http://healthaffairs.org/blog/2015/01/22/unpacking-the-medicare-shared-savings-proposed-rule-geography-and-policy/
[28] commercial programs: http://healthaffairs.org/blog/2014/04/17/four-years-into-a-commercial-aco-for-calpers-substantial-savings-and-lessons-learned/
[29] overviews: http://healthaffairs.org/blog/2014/05/30/aco-results-what-we-know-so-far/
[30] leave: http://www.wsj.com/articles/a-medicare-program-loses-more-health-care-providers-1411685388