Value-based care holds providers accountable for quality and cost by putting them at risk. However, ACOs — one of the most common value-based care models — are slow to adopt downside financial risk and have demonstrated a strong inclination toward upside risk-only contracts, according to a recent analysis from Salt Lake City-based healthcare intelligence firm Leavitt Partners.
Risk matters in ACO contracts because it precipitates meaningful change. "The more risk providers are accountable for, the more likely they are to create care efficiencies, improve quality and lower costs," the analysis reads.
Based on a survey of 104 nationally representative Medicare and commercial ACOs conducted in 2015 and information from Leavitt Partners' ACO database, the analysis revealed 61 percent of all ACO contracts are shared savings, upside-only risk contracts. However, the analysis also revealed certain types of ACOs were more likely than others to assume financial risk.
Leavitt Partners organized its findings by creating a taxonomical framework to describe the various types of ACO leadership structure, contract type and services provided, and came up with six ACO types: independent physician group, physician group alliance, expanded physician group, independent hospital, hospital alliance and full-spectrum integrated.
Here are some of the key findings from the analysis.
- ACOs with fewer owners tend to be involved in fewer contracts. Leavitt Partners found ACOs led by independent physician groups and independent hospitals were more likely to have a single contract, while full-spectrum integrated ACOs and hospital alliances with multiple owners were most likely to have contracts with four or more payers.
- ACOs tend to engage in a single contract or four or more contracts. As Leavitt Partners put it, there are "toe-dippers" and "all-in ACOs" and few that fall between.
- All types of ACOs preferred upside-only risk contracts except the hospital alliance ACOs, which include inpatient, hospital-advanced care and generally have multiple owners.
- Independent physician group ACOs proved to be most risk averse, with 82 percent of contracts in upside-only arrangements and just 7 percent in downside-risk arrangements.
- Generally, ACOs were more likely to take on risk if they covered more lives. This may be because it enables an ACO to spread risk across a larger patient population.
"The preference for upside risk-only shared savings arrangements may signify that ACOs are generally risk-adverse or are still experimenting with accountable care and not ready to bear financial risk," the analysis reads.
Leavitt Partners said more research is needed to understand what makes an ACO more likely to take on risk.
Read the full whitepaper here.
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