This year has been a tumultuous one for accountable care organizations, with some reaping the benefits of value-based reimbursement, while others suffered financially and decided they needed to make a change.
Created under the Patient Protection and Affordable Care Act, accountable care organziations are a model of care aimed at meeting healthcare's triple aim. Although they have common goals, ACOs can take on a number of forms, with some achieving more success than others in the past year.
In 2014, the number of ACOs increased. As of May there were 626 ACOs, of which 329 had government contracts, 210 had commercial contracts, and 74 had both types, according to Leavitt Partners analysis from June 2014. The remaining 13 ACOs had not released the specifics of their contracts at the time of the report.
Medicare Shared Savings Program produces mixed results
The Shared Savings Program has become a popular option for hospitals and health systems interested in participating in a value-based care model, while limiting the risk involved. Providers in the MSSP are required to make a three-year commitment to care for a group of at least 5,000 Medicare beneficiaries.
The first organizations in the MSSP were launched in two waves in April and July 2012, and CMS added additional ACOs to the program in January and December 2013. As of May, the organizations in the MSSP covered 5.3 million of the total 20.5 million lives covered by all ACOs, according to Leavitt Partners analysis.
In September, CMS released the quality and financial results of the MSSP ACOs with 2012 start dates for the first performance year. Overall, the results were not promising, with only about 26 percent of the organizations decreasing spending enough to receive bonus payments. The 53 ACOs that received bonuses earned more than $300 million as their share of program savings, with Houston-based Memorial Hermann ACO and Palm Springs (Fla.) ACO earning the largest bonuses, receiving $28.34 million and $19.34 million respectfully.
In addition, one ACO’s healthcare spending accelerated during performance year one, which resulted in $4 million in penalties.
Concerning improving healthcare quality, the results painted a more promising future for the MSSP, with ACOs participating in the program improving on 30 of 33 quality measures.
Interest in the Pioneer program is dwindling
The original 32 Pioneer ACOs were announced in 2011, and their first performance year began in January 2012.
This year, CMS released the Pioneer program results for 2013, or performance year two, and like the MSSP's performance year one results, some ACOs in the Pioneer program experienced success, while others did not achieve their desired outcomes.
In 2013, 11 of the 23 Pioneer ACOs earned financial bonuses that totaled $68 million. However, three ACOs' health spending accelerated, resulting in penalties. Overall, improvement in healthcare quality was a strong area for Pioneer ACOs in 2013, as they improved on 28 of the 33 quality measures.
The ACOs’ results for 2013 came as no surprise, as Pioneer ACOs' financial outcomes for 2012 were a mixed bag as well, with some ACOs posting significant savings and others recording losses.
After performance year one results were released, nine ACOs left the Pioneer program, and there was speculation as to why each organization had decided to exit. Providing some clarity on the issue, this year, for the first time, CMS released the financial and performance results of individual Pioneer ACOs.
The results showed eight of the nine ACOs that left the program posted losses for the first performance year, and none of them earned shared savings.
As with the first performance year, more ACOs decided to ditch the Pioneer program after performance year two results were released. Sharp Healthcare in San Diego was the first to announce its exit, and the individual financial results revealed its ACO posted a loss of 1.3 percent in performance year two.
Following in Sharp Healthcare’s footsteps, three more ACOs left the Pioneer program in September after failing to meet the benchmarks to receive shared savings, leaving only 19 ACOs in the program.
Commercial agreements
Since 2011, the number of commercial ACOs has steadily grown, and as of May, 12.4 million lives were covered by an ACO with a commercial contract.
There continues to be a few major commercial payers that are the main players in the ACO arena. Cigna, a clear front-runner, has more ACO contracts than any other commercial payer, with its contracts making up 19 percent of total commercial contracts as of May. Aetna also has a significant number of contracts with ACOs, with its agreements making up approximately 9.1 percent of all commercial ACO contracts, according to Leavitt Partners analysis.
There are a few other insurers that are greatly involved in the ACO space, such as UnitedHealthcare, which as of May had 4 percent of all commercial contracts. The payer intends to continue to contract with ACOs, and estimates $50 billion of its reimbursements to providers will be attributable to accountable care by 2017, which is more than double the $20 billion of its reimbursements that are currently attributable to the model of care.
Looking forward
Value-based models of care such as ACOs will continue to draw interest in coming years, with the healthcare industry shifting from fee-for-service to pay-for-performance.
The number of lives covered by ACOs is expected to reach 40 million in 2015 and continue to grow to more than 130 million by 2017, according to a report from Dallas-based Parks Associates, a market research and consulting company.