The accountable care organization – Are we getting the results we expected?

June 13th, 2018 / By Steve Delaronde

The accountable care organization (ACO) was first proposed in 2006 as a method for reigning in the increasing costs of health care. The Medicare Shared Savings Program (MSSP) was enacted in 2010 as part of the Affordable Care Act and has grown from 27 ACO participants in 2012 to 561 in 2018. While there is some indication that ACOs can be successful in reducing cost and improving quality, the results are not consistent, and the mechanism by which savings are achieved is disputed. The goal of reduced cost and improved quality is clear, but what is the best way to achieve this?

Costs are reduced by decreasing unit cost, utilization, or a combination of these. A recent study appearing in JAMA in March 2018 comparing the United States with other healthcare systems in high income countries concludes that utilization reductions alone will not reign in healthcare costs. Prices and administrative costs have a greater impact on healthcare spending in the United States than utilization and spending on social programs.

Vertical consolidation of services such as primary care, outpatient, inpatient, behavioral health, pharmacy, rehabilitation services and skilled nursing facilities is theorized to result in improved care coordination. The merging of these services into one financial entity is not always necessary, and in many cases, may be antithetical to reductions in price. While provider consolidation may not have accelerated because of new payment models, the tendency towards better care coordination that results from consolidation has not led to price reductions.

Since an ACO is accountable for the total cost of care generated by an attributed patient, there is an incentive to assure that the service is performed at the setting with the lowest cost while maintaining high quality. This approach simply amounts to cost shifting and may be effective in the short term, but unlikely to be sustained without more comprehensive payment reform and price stabilization in the long term.

There are a variety of methods for achieving cost reductions and quality improvements, but no clear approach has emerged. It is likely a combination of approaches that focus on both patient and provider behavior change that will lead to the most favorable outcomes. Identifying the component with the most substantial impact on total cost of care remains a challenge. 

Chronic care management represents a promising approach to controlling costs, since a small group of patients, particularly those with multiple complex chronic conditions, are responsible for a large portion of healthcare costs. However, most of the behavior change that needs to take place is related to patient lifestyle choices, socioeconomic factors, and environmental influences outside the purview of the healthcare system. Nevertheless, there is an opportunity for healthcare systems to adopt approaches and form partnerships with organizations that will help influence patient behavior across the continuum.

Transition to a comprehensive capitated payment system that transfers risk across all types of providers and health systems is highly unlikely. However, that does not imply that success cannot be achieved through targeted approaches that address positive physician behavior change. Decision support models, bundled payments and reimbursement reductions for potentially preventable services are worthy approaches to incentivizing positive physician behavior.

The move from “volume to value” will continue to foster changes in the healthcare system that seek to change patient and physician behavior. It is unlikely that one uniform and comprehensive approach will arise in a U.S. healthcare system that has historically resisted a single delivery and financing approach. While these efforts will have an impact on reducing unnecessary utilization and improving care coordination, the results in controlling costs will be limited without more targeted finance reform.

Steve Delaronde is director of consulting for populations and payment solutions at 3M Health Information Systems.