The Long and Winding Road to Accountable Care: Beyond the Upcoming ACO Reg.

The ACO waiting game continues.  Health policy wonks inside and outside the Beltway are placing bets on when the  new proposed rule for the Medicare Shared Savings Program (MSSP), the most popular of Medicare’s ACO programs, will be released.  For those of you who haven’t been sitting on the edge of your ACO seat, the new rule has been sitting at the White House since before the 4th of July.

Will the rule offer a series of minor ACO tweaks and fixes to improve the program or will it represent a fundamental policy shift?  Wherever the proposed rule lands on various details (see chart below), several critical philosophical and ideological issues will linger. Three of these big-picture issues are likely to have a bigger impact on the trajectory of the ACO movement than anything that comes out of the proposed ACOs 2.0 rule.

Hospital-Led vs. Physician-Led ACOs?

To many analysts’ surprise, physician groups lead more of the initial MSSP ACOs than hospitals. Underlying this reality is a trade-off. On the one hand, hospitals generally have much better infrastructure than physician groups—in terms of electronic data capture, analytic capabilities to use data intelligently to target the right population, and the human resources to deploy better population health management.  Hospitals just seem better prepared to assume substantial population-based risk. On the other hand, for most hospital-led ACOs, they remain at risk for a small fraction of their costs. Most acute events they prevent through better population health reduces inpatient revenue due to large investments in fixed-cost assets. In contrast, physician decisions drive a great deal of downstream facility costs for which they gain no revenue. Physician-led ACOs have clearer aligned incentives and more direct relationships with their patients, offering greater opportunities to influence their behavior, particularly around the management of chronic conditions.

Are ACOs a Destination or Just an Interim Step?

ACOs offer one model (with several variations) for providers to take on increasing accountability for population health. For many ACOs where providers take on population-level risk for the first time, the new payment model seems overwhelming.  Providers struggle just to figure out the basics—understanding their data, developing proactive patient outreach strategies and coordinating care among multiple providers. For other providers, ACOs offer a stepping stone to more extensive risk-bearing arrangements, potentially building their own health plans. These organizations view ACOs as a testing ground and a learning opportunity where they can refine these new capabilities, with the ultimate goal of building a business strategy off of the whole premium dollar rather than just 80 to 90 percent. With all the feasibility and regulatory challenges involved in retrospective patient attribution and other ACO idiosyncrasies, it remains unclear whether ACOs will survive as a mixed payment model or if they will give way to more streamlined, higher-risk models.

“Accountable” for What and By Whom?

An array of differing players exist in the health care industry who could play a role in leading ACOs; although, most ACOs currently leave some critical health care costs outside of their accountability. Case in point: outpatient drugs.  They remain outside the ACO’s sphere of accountability in the MSSP, which raises questions about cost-shifting by the ACOs. It’s hard to maintain full accountability for population health when key services exist outside of your “accountability.”

Questions remain about the role of different professionals and organizations. Most ACOs use primary care as the central point of definition for where a patient belongs. Does that make sense for all patients, such as those in active cancer treatment or otherwise getting most of their ongoing care from internal medicine subspecialists? With regard to primary care’s definition, does it necessarily require a physician as opposed to a nurse practitioner? In addition, other types of health care organizations may increasingly see more central roles for their organizations in population health accountability, such as pharmacy chains and other consumer retail companies.

Looking Ahead

Early results from public and private sector ACOs are mildly promising in terms of their potential for improving quality and bending the cost curve. Additional years of experience with ACOs will educate us on how well different population health accountability models perform. We also know, however, that other roads still exist—some with very winding pathways—to get to true value-based payment and care delivery models. Undoubtedly, CMS will address some of the challenges that early MSSP ACOs have faced in its upcoming proposed rule. But regardless of what we see in the Federal Register, these other questions may ultimately have much more impact on the road to accountable care.

ACO Reg Chart

Joshua Seidman, PhD is the Vice President of the Avalere Center for Payment & Delivery Innovation


Morning Consult