Substantial Physician Turnover And Beneficiary ‘Churn’ In A Large Medicare Pioneer ACO

By John Hsu, Christine Vogeli, Mary Price, Richard Brand, Michael E. Chernew, Namita Mohta, Sreekanth K. Chaguturu, Eric Weil and Timothy G. Ferris
Health Affairs, April 2017


Alternative payment models, such as accountable care organizations (ACOs), attempt to stimulate improvements in care delivery by better alignment of payer and provider incentives. However, limited attention has been paid to the physicians who actually deliver the care. In a large Medicare Pioneer ACO, we found that the number of beneficiaries per physician was low (median of seventy beneficiaries per physician, or less than 5 percent of a typical panel). We also found substantial physician turnover: More than half of physicians either joined (41 percent) or left (18 percent) the ACO during the 2012–14 contract period studied. When physicians left the ACO, most of their attributed beneficiaries also left the ACO. Conversely, about half of the growth in the beneficiary population was because of new physicians affiliating with the ACO; the remainder joined after switching physicians. These findings may help explain the muted financial impact ACOs have had overall, and they raise the possibility of future gaming on the part of ACOs to artificially control spending. Policy refinements include coordinated and standardized risk-sharing parameters across payers to prevent any dilution of the payment incentives or confusion from a cacophony of incentives across payers.

From the Introduction

Recently, the Centers for Medicare and Medicaid Services (CMS) announced intentions to move half of all Medicare payments away from traditional fee-for-service reimbursement by 2018 and toward alternative payment models, such as those exemplified by the accountable care organization (ACO) program.

Using a combination of organizational and Medicare data, we examined the distribution of beneficiaries in a Pioneer ACO across affiliated physicians, the magnitude of physician changes from year to year, and the impact of physician changes on an aligned beneficiary population.

From the Discussion

There are two important findings. First, not all physicians had attributed beneficiaries, and those who did had relatively few ACO beneficiaries, on average. This limited ACO penetration at the physician level could mitigate the ACO’s potential to achieve its financial targets, at least for any effects mediated through physician behavior. With the small numbers, it is not surprising that the distribution of high-spending beneficiaries also is skewed such that a few physicians appeared to have the sickest beneficiaries, while many appeared to have mostly beneficiaries with modest spending.

Second, we found evidence of substantial changes in the affiliation status of physicians with respect to this large Pioneer ACO, which were associated with changes in numbers of beneficiaries aligned and could affect the predicted spending for the ACO beneficiary population. New physician affiliations accounted for only half of the growth in the ACO beneficiary population over time. In short, the physician changes appeared to affect the composition of the ACO beneficiary population, which could have important implications for the ACO program’s overall financial impact.

With higher physician reimbursement and explicit CMS goals associated with alternative payment models, it is likely that the impetus will only increase for physicians to join ACOs. ACOs’ ability to deliberately select participating physicians year to year, however, creates a relatively simple mechanism to “game” the risk pool. For example, in our sample, dropping the twenty-two primary care physicians (top 5 percent) with the most high-spending beneficiaries (spending more than $81,000) would reduce the mean Medicare ACO spending per beneficiary by 17 percent.

The presence of this mechanism and the ease of its use, especially compared to the more difficult task of redesigning care, could result in an undesirable but powerful temptation for ACOs, particularly those facing financial constraints or pressing financial motivations. Indeed, the push to increase ACO incentives now that the program is in its fifth year could exacerbate this concern.

From the Conclusion

As the pace and magnitude of reform grow, we might expect that the potential impact on physicians’ behavior could increase but that the amount of organizational change also could accelerate, thus creating the potential for mischief.…

Under the MACRA replacement for the flawed SGR method of determining Medicare payments, CMS is moving forward with shifting the delivery system into alternative payment models, the predominant model being the accountable care organization (ACO). This study of one of the premier ACOs in the nation (Partners HealthCare) should make us question whether such a shift is wise policy.

Briefly, this study shows that there is considerable instability in the professional relationships of physicians and patients due to considerable churning in both professional employment and patient enrollment in ACOs. Also, ACO patients are a small percentage of the physicians’ patient populations and thus provide little motivation for the delivery model improvements that some in the policy community say would be inevitable in the drive to higher quality and lower costs that the ACO model supposedly promotes. Further, as this article explains, the ACO organizational change creates “the potential for mischief.” Flags should go up.

When we want to save money, improve quality and improve the physician/patient relationship, this does not seem to be the right model to pursue. In contrast, changing to a well designed single payer system improves efficiency while establishing long term professional relationships. The policy community should be working on that model instead – an improved Medicare for all.