Health IT Pulse

Aug 1 2013   11:56AM GMT

ACO dropout rate concerning but it’s alpha testing healthcare’s future

Don Fluckinger Profile: Don Fluckinger

accountable care organization
Affordable Care Act
Pioneer ACO Model
population health management

CMS announced that several Pioneer accountable care organizations (ACO) participants are changing their status to lower-risk, lower-reward plans, or even dropping out altogether. While many news outlets covered the story, the Wall Street Journal’s scoop came out with “horse’s mouth” numbers a day ahead of CMS’s release.

Launched by the Affordable Care Act (ACA) and a banner initiative for U.S. healthcare reform, ACOs could be the path that leads our healthcare system from a bloated fee-for-service reimbursement scheme. Fee-for-service is already bankrupting governments, employers and patients and if no change is made, it will likely bankrupt many more in the next five years if costs escalate at present rates. ACOs, however, reboot the system in a fee-for-health model that rewards health systems for keeping patients healthier.

The Pioneer ACOs were drawn up as pilot projects for what could eventually be Medicare-wide patient population health management payment models. The results of the first year’s reimbursement numbers published by CMS showed mixed results, with a lot of tweaking left to be done before these ACOs are ready for prime time.

  • Two of the 32 Pioneer ACOs lost money
  • Two others elected to drop out completely
  • Seven of them downgraded to less financially risky payment models
  • On average, costs for the more than 669,000 Medicare beneficiaries treated in the 32 ACOs  grew by only 0.3% in 2012, compared with 0.8% growth for typical Medicare beneficiaries. Slowing the expansion of costs is the first step en route to reducing them in the future.

Taking the glass-half-full view, it’s heartening to know that 18 of the 32 Pioneer ACOs lowered costs for themselves and Medicare, and the savings were split between payer and provider. It’s also interesting to note that 250 other Medicare providers participate in the Shared Savings program, a proto-ACO group that pushes no financial risk onto providers and covers 4 million patients.

This, dear reader, is the future of healthcare. Commerical payers are experimenting with their own ACO-like initiatives, such as Blue Cross Blue Shield of Massachusetts Alternative Quality Contract. The Journal story reported  some 200 commercial payers nationwide are experimenting with such programs. Quality-based, value-based, global budget payments, bundled payments, risk-based payments…they’re all in the same ballpark, gravitating away from fee-for-service.

Certainly, though, the opponents of every single political policy move our president makes will somehow spin CMS’s ACO numbers into something incendiary and insanely false, such as: “See how the death panels are working out? They’re turning our independent, capitalism-fueled health system into Socialist Canada!” or some such hokum. The much more reasonable questions they might ask are: “Is it too early to pass judgment on the ACO idea?” and possibly, “Did we really have to spend taxpayer money alpha-testing this new payment model, or could we have spent less, later, letting the commercial payer ecosystem figure it out first?”

But on both sides of the political fence in this era of toxic debate, reason is in short supply. Here’s to hoping that, to steal a frequently used catch-phrase from my esteemed colleague Alex DelVecchio, the policymakers in charge of plotting Medicare’s future use the best parts of ACOs, and forget the rest. Whether it’s the ACO concept that survives or some other similarly IT- and data-driven initiative, there certainly will be positives to take away from CMS’s great experiment that Congress (including the Republicans that voted for health reform) mandated the agency conduct. Congress signed the Pioneer ACO pilot’s purchase order; they have to live with it now.

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