Medicare's 32 Pioneer accountable care organizations posted mixed results after two years, revealing once again that making money from care coordination is proving a heavy lift for most provider organizations.
The overall savings to the CMS at first blush seem fairly large—the agency spent $384 million less in the 32 ACOs than on comparable panels of Medicare patients over the two years. But the fact that savings in the second year were less than half the first year's savings suggests there are diminishing returns to the approaches being tried by even the most successful provider organizations in the program.
More significantly, a third of the group had no savings in either year, and at least two posted significant losses. Clearly, many of the provider groups in this self-selecting pool still ain't ready for reform, as they like to say in Chicago.
And what does that say about the thousands of other provider organizations that have barely started on the care-coordination journey?
Some of the biggest winners in the program hailed from the Boston area, where Atrius Health, Beth Israel Deaconess Medical Center and Steward Health Care System accounted for fully 70% of all savings in the second year. Steward and Beth Israel also posted some of the biggest savings in the first year.
Is it possible that regions dominated by expensive academic medical centers—which in the Boston area means organizations operating under the Partners HealthCare umbrella—create a more hospitable landscape for payment-reform experiments? Perhaps feisty organizations that compete against an entrenched incumbent are better prepared to manage an ACO.
Another possibility is that the long-running and very public debate about healthcare reform in Massachusetts, the first state to reach near-universal health insurance, created more fertile ground for the aggressive care coordination that leads to lower costs. Physicians and patients in the Boston area are more likely to understand the stakes since there has been broad public discussion about costs, quality and delivery-system reform. That isn't true in many areas of the country, where the only discussion about Obamacare usually involves the insurance coverage expansion.
Two other ACOs that generated significant savings are affiliated with HealthCare Partners, the giant multispecialty physician practice based in the Los Angeles area that is now owned by DaVita. Yet not every medical group-led ACO did well in the Pioneer program.
Many observers say large physician organizations that have strong primary-care practices are the logical home for the ACO-type coordination activities that can eliminate unnecessary care. Not having a hospital—a cost center when organizations take on financial risk—allows for that kind of thinking. Perhaps the lesson to be learned here is that for physician-led ACOs to succeed, they need scale and professional management, which most often is found in large organizations.
The CMS is under pressure to make adjustments to its ACO program. Participating provider groups want Medicare beneficiaries to opt into the ACOs, with financial incentives for staying in-network. That would generate greater patient engagement.
Perhaps the CMS should even allow beneficiaries to share in any savings. Studies have long shown that informed patients who actively participate in medical decisionmaking tend to make more conservative choices. That also usually translates into a better choice from a medical standpoint.
Adding a financial incentive would reinforce that approach. It also would improve compliance, since patients who know they are in an ACO would be more likely to think the physician's directives and prescriptions are truly necessary.
But perhaps the greatest lesson of all from the first two years of the Pioneer ACO program comes from the fact that the downside risk associated with the program still isn't a major factor in the overall finances of the provider organizations that participated. Nothing concentrates the mind of healthcare executives like the threat of losing a lot of money.
Until ACOs take on full actuarial risk for all the expenses of the patients under their care—the equivalent of a provider-led health maintenance organization—we won't have proof that financially motivated care coordination is an effective tool for improving overall quality while lowering costs.