State of the Industry: Future of ACOs

The number of accountable care organizations (ACOs) has doubled during the past year with Medicare ACOs taking the lead over commercial entries into the healthcare space, according to Leavitt Partners.

Since the inauguration of the Medicare Pioneer ACO and Shared Savings programs, the model has grown to 106 total ACO players providing care for about 1.6 million beneficiaries, according to the Medicare Payment Advisory Commission (MedPAC).

Despite the growth of Medicare ACOs, Stephen Thome, senior manager, healthcare practice for Ernst & Young in Cleveland, says commercial ACOs are growing at an organic pace and are not affected by the same regulations as their Medicare counterparts-federal governance, management and leadership requirements.

“Commercial payers have come up with accommodations to share start-up costs, and the process for attributing patients to the ACO can be more transparent and timely,” he says.

He also says ACOs will need to develop a more sustainable payment model to survive long term. The initial Shared Savings model will need to mature to provide more predictable payment streams and to  align incentives for payers and providers.

 “They also will need to deliver on medical management, and provide better care for less,” Thome says.  “Otherwise, they will become irrelevant and add another layer of costs.”

But as the competition among ACOs increases, he believes that the healthcare marketplace will see a bend in the cost curve and improved quality of care.

 “Five years ago, the partnerships between plans and providers in an ACO would have been unthinkable,” he says.

Any ACO partnership would require an information technology infrastructure, says Gene Muise, director of pharmacy for Mount Auburn Cambridge Independent Practice Assn. (MACIPA), a 500-multispecialty physician group in Cambridge, Mass., and an original Pioneer ACO.

“If ACOs can meet performance measures, improve quality, save money and boost buy-in and communications with health plans, the model holds promise for the future,” Muise says.

MACIPA has experience with models similar to an ACO as far back as 1985, when it secured risk-based contracts covering individuals in HMOs offered by Tufts Health Plan, followed by Blue Cross Blue Shield of Massachusetts and Harvard Pilgrim Health Care in the mid-1990s.