Moving Forward With Accountable Care Organizations

By Carrie H. Colla, PhD; Elliott S. Fisher, MD, MPH
JAMA Internal Medicine, February 13, 2017

During the past 4 years, we have made great strides in advancing our understanding of the changes that hospitals and physician groups implement in response to changes in payment and how providers perform under alternative payment models. Accountable care organization contracts, one type of alternative payment model, hold groups of health care professionals responsible for the cost and quality of care delivered to patients. Accountable care organization programs attract a diverse array of providers with differing legal and governance structures, varied contracts, and mixed capabilities that span service dimensions. These capabilities may include care management personnel and programs, adoption of advanced analytics (eg, to estimate the risk of hospitalization), or support for shared decision making. On average, ACO patients are spending modestly less on health care services and are associated with improved patient satisfaction and other patient-reported measures, with gains often concentrated in high-need, high-cost populations. Previous exposure to risk-bearing contracts, greater numbers of dually eligible or disabled patients, and higher initial financial benchmarks have been associated with greater savings. At the same time, these results mask variation in performance, with some ACOs saving while others spend over their benchmark following ACO formation. In addition, these modest savings have come at a net cost to the Medicare program (both program costs and shared savings rewards) and, although some quality measures have improved, many have not.

The research presented in this issue of JAMA Internal Medicine provides insights from 3 different ACO payment models: the Medicare Shared Savings Program (MSSP), Colorado’s Accountable Care Collaborative, and Oregon’s Coordinated Care Organizations. All 3 programs show some degree of success, although the results continue to be modest in magnitude.

These findings are relevant to 3 major considerations facing policymakers: (1) concerns about the harms of consolidation, (2) the amount of risk bearing needed to produce changes in behavior, and (3) how to manage potential conflicts between alternative payment models.

Consolidation between clinical providers, such as purchase of physician groups by hospital systems, and striking the proper balance between facilitating clinical integration and limiting market power is a major concern. Many believe that continued survival of independent practices is critical, yet economic incentives favor consolidation due to higher reimbursement for the same service in a hospital-based office compared with a physician office. Hospital-physician group consolidation can also raise prices in less-competitive commercial markets through increased bargaining power vis-à-vis insurers.

Accountable care organizations are defined by their accountability for the cost and quality of care, but the degree of accountability for spending varies dramatically across contracts. The amount of financial risk bearing necessary to achieve behavior change is an important area of inquiry, in part because so little is known. The incentives in most existing alternative payment models, including ACOs, are commonly considered insufficient to result in behavior change.

A third issue concerns potential conflicts between Medicare alternative payment models and the poorly understood interplay of incentives across these reforms. Currently, hospitals retain savings within inpatient-initiated bundles for patients attributed to an MSSP ACO. Although incentivizing value within a bundle, bundled payment models do not eliminate the incentive to provide more bundles. As the Centers for Medicare & Medicaid Services expands alternative payment models, it is possible that bundled payment programs will undermine overall savings.

In summary, we still have much to learn. Accountable care organizations have been established across diverse market settings, using a multitude of organizational structures and approaches to governance and operations, and this heterogeneity is reflected in the heterogeneity of their performance. The 2 articles published in this issue add to a growing body of evidence on overall performance, several dimensions of quality, and spending. Nevertheless, we know little about the effects of ACOs on patients’ health and quality of life. Perhaps most important for ACO leaders and the long-term success of these programs, we know little about the key ACO capabilities that are important to ensuring their success in different organizational or market contexts. Although the Centers for Medicare & Medicaid Services has conducted rigorous evaluations of the Pioneer program, generalizable findings tailored to organizational contexts are few. A long-term commitment to alternative payment model evaluation is necessary to ensure effective, sustainable payment and delivery system reform.

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This lesson on accountable care, from the Dartmouth Institute, shows us that we still have much to learn. The respected authors state that a long-term commitment to alternative payment model evaluation is necessary. In the meantime, “we know little about the key ACO capabilities that are important to ensuring their success in different organizational or market contexts.”

We actually do have quite a bit of information, and it is unimpressive. What we cannot do is to allow a protracted course of many years or decades of studying accountable care to distract us from the urgent need to make changes that will ensure that everyone has affordable access to health care while dramatically reducing the profound administrative waste in our system.

The Affordable Care Act made some improvements, but not nearly enough as witnessed by the tens of millions uninsured and underinsured, by the failure to make health care affordable for too many of us, and by the perpetuation of the costly administrative excesses.

The next phase of reform being undertaken by our current Congress seems to be pending enactment of policies that would make markets work better for insurers but at a cost of leaving patients exposed to excessive out-of-pocket spending. They do not seem to be even pretending that accountability in shifting from volume to value is anything more than rhetoric (and the studies to date suggest this is true).

First things first. Let’s do what really works – enact a single payer national health program, an improved Medicare for all. It is a far better infrastructure to tease out data that might be used to actually improve quality while containing costs. But let’s not stall any longer on enacting the fundamental reform that we really need to make health care affordable for all of us.