The verdict is still not in regarding the effectiveness of ACOs, whether backed by Medicare or a commercial or self-funded health plan. HHS' Office of Inspector General recently released a report indicating savings can be had through the model. ACOs participating in the CMS' Medicare Shared Savings Program reduced spending by about $1 billion in the first three years, according to the OIG.
Most of the 428 ACOs in the first three years of the shared-savings program reduced Medicare spending compared with their benchmarks, and a small group of those ACOs produced "substantial" savings. The vast majority of the ACOs—82%—also improved the quality of care they provided, based on data from the CMS on 33 quality measures. They outperformed fee-for-service providers in 81% of those measures. "While policy changes may be warranted, ACOs show promise in reducing spending and improving quality," the OIG report concluded.
The news may be even better for employer- or insurer-backed ACOs.
Michael Chernew, a health policy professor at Harvard Medical School, said commercial ACOs have not been as widely studied as the Medicare ACOs, where both quality and cost results are publicly available. But he said most evidence suggests commercial ACOs do better on controlling spending growth than Medicare ACOs have so far.
He said there is widespread variation in results, but commercial payers contracting with ACOs have two advantages—they have a better ability to coordinate and customize agreements with local providers than Medicare does, because that organization must have a national protocol, and commercial ACOs' can shift where people get care.
Chernew said a study he co-authored on ACOs in the Boston market found that one of them achieved savings by shifting patients away from the pricier hospitals.
That has worked for Health New England, the insurance arm of Baystate Health, based in Springfield, Mass. Dr. Mark Keroack, Baystate's CEO, said the health plan has about 120,000 commercial members out of more than 200,000 covered lives.
"Most of the time they are interested in aggressively managing costs," Keroack said of the commercial clients.
He said receiving more timely data on the people covered by Health New England has been critical to "reduce out-of-area leakage." He said about 10% of the insured customers account for 20% of the amount spent, and two-thirds of those people are going to Boston for care when the same services are available in western Massachusetts at a much lower cost.
"Our prices are 50% of theirs," he said of the Boston providers that have what he called a "brand mystique."
So far Health New England has been able to persuade more enrollees to stay local for services such as spinal fusion and cardiac procedures. While the insurer posted significant losses in 2015, last year "the health plan was more of a profit center than the delivery system," Keroack said.
In the National Business Group on Health survey, among the companies served by ACOs, 68% are somewhat confident that their ACOs will reduce the total cost of care and 24% are confident or very confident the approach will save money.
Said Harvard's Chernew, "It's certainly true that the ACOs are not the big home run" in bending the healthcare cost curve. "On the other hand, maybe they're a blooped single." He said that even if ACO savings are small, it's worth continuing to explore the approach, since there has been no big home run in bending the cost curve anywhere else. "If someone offers you a dollar and gives you a dime, take the dime."
—with Shelby Livingston