Oliver Wyman on ACOs

Accountable care organizations have been hailed by many as the latest innovation that will improve health care quality while lowering spending or at least spending growth.  Oliver Wyman, in a recently released report, continues this trend by touting ACOs as the most important aspect of the health reform law and the development that will finally force providers to compete on price and on value delivered.    (OW Report)   The report claims that accountable care organizations are already caring for many more people than is commonly believed and are showing early successes.  The authors’ math, however, is beyond fuzzy.  The reform law focused on ACOs for Medicare beneficiaries and the law and rules under it have set forth a detailed set of requirements for how an ACO must be structured and must operate, which are consistent with those from other accrediting-type groups.

Notwithstanding this fairly clear definition, the authors find that as many as 10% of Americans are currently covered by and have their care managed according to ACO standards.  They get there by claiming that 2.4 million Medicare beneficiaries are currently covered by ACOs, or by other practice arrangements that are like ACOs.  This makes the highly unlikely assumption that all Medicare beneficiaries in these organizations are treated according to the ACO rules.  The math gets more absurd when they add the 15 million non-Medicare patients in these supposed ACO practices and the 8 to 14 million patients in non-Medicare “ACOs”.  Not only is the math illogical, the assessment of results similarly looks only at results from ACOs that actually have any positive cost and quality trends, regardless of how skimpy the evidence, and then assumes all ACOs will do that well.  Hyperbole, pure and simple.  And what the authors don’t mention is that ACOs will further consolidate provider market power and lessen competition, thereby driving costs higher.