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Physician and hospital networks known as accountable care organizations are growing and generating Medicare savings, but industry says they can do better, with some help from policymakers.
These networks of doctors, hospitals, or other health-care providers are growing in number, from 480 in 2017 to 561 ACOs this year under the Medicare Shared Savings Program, according to the Centers for Medicare & Medicaid Services. The ACOs aim to work together to provide better, more coordinated care and reduce spending in fee-for-service Medicare.
The Medicare ACOs were created under the Affordable Care Act, and are a part of that law that’s been relatively noncontroversial, perhaps because the Medicare agency has made it easier for some health-care providers to participate and share savings. Also on the rise is the number of patients in the ACOs, growing from 9 million assigned beneficiaries in 2017 to 10.5 million in 2018, a 17 percent increase from 2017, according to the data from the Medicare agency.
The organizations could save more money and improve patient care further if Congress and the Trump administration allow for flexibility and set better benchmarks, Allison Brennan, vice president of policy at the National Association of Accountable Care Organizations, told Bloomberg Law in a January video interview. Among the potential ways to help ACOs is eliminating overlap with other Medicare payment programs, and a congressional proposal with new types of bonus payments.
The recent growth in ACOs is due in part to a new type of risk-based model that may be more attractive for the health-care organizations due to less downside risk. This new risk-based model, Track 1 plus, started in 2018 and includes 55 ACOs. Under a risk-based track, health-care providers must pay back a portion or all costs that exceeded the payer’s benchmark, but they also have the opportunity to earn higher savings through bonuses and portions of the shared savings they made to the Medicare program. Risk-based models resulted in net savings to the Medicare program in 2016, according to the Medicare Payment Advisory Commission.
ACOs have also been providing higher-quality care to patients. The CMS also reported that overall quality scores for ACOs increased from 91.44 percent in 2015 to 94.65 percent in 2016.
“We see that ACOs are doing a good job with their goals for generating savings and improving quality,” Brennan said. “But unfortunately we’re seeing that only about a third of ACOs are actually achieving shared savings payments, and that’s the goal of the program.”
Brennan said her organization has several actions it wants the agency to take to make the program stronger, including changing some benchmark methodologies and addressing some of the program’s overlap with various other alternative payment models. Patients can sometimes fall into both ACOs and bundled payment programs in the same year, which leads to complex program overlap that can favor one program over another.
“When we see this overlap of different programs, it creates conflict and confusion,” she said. “This overlap is making it harder for ACOs to be successful, as some of these other programs are undermining ACOs.”
Legislative changes to ACO programs could also be on the horizon. In December, House members introduced the bipartisan ACO Improvement Act of 2017 (H.R. 4580), which aims to reduce unnecessary costs to participants in the programs and further improve patient outcomes.
The bill includes bonus payments for quality achievement and quality improvement, methodology changes to account for patient health status changes over time, and waivers for existing rules on telemedicine and remote monitoring. The bill has received praise from the American Medical Association and Premier Inc., a group purchasing organization for hospitals, and has been referred to the House committees on Energy and Commerce and Ways and Means.
Brennan said that the legislation is likely to see movement, despite a busy schedule for lawmakers, as she sees Medicare reform and ACOs being bipartisan issues.
Rep. Diane Black (R-Tenn.), one of the bill’s sponsors, told Bloomberg Law the current fee-for-service Medicare payment system does little to encourage health-care providers to use the most appropriate and effective health-care options.
Rep. Peter Welch (D-Vt.), another sponsor, said paying health-care providers based on improvements in patient health rather than the number of procedures they perform is the way of the future. “Our legislation will advance these payment reforms and is based on the experience of ACOs in Vermont and around the country,” he said in a statement to Bloomberg Law.
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