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CMS’ Early Results on ACOs

By July 23, 2013Commentary

Accountable care organizations, coupled with some sort of capitation or global payment mechanism, are being counted on as one of the cornerstones for reducing health care costs.  The Centers for Medicare and Medicaid Services has for several years engaged with provider groups in demonstrations and pilots similar to the accountable care organization concept, including a set of “pioneers” for the ACO model to be used in Medicare.  The agency recently released some analysis from the first year of that pioneering ACO effort.   (CMS Analysis)   While the agency obviously tried to put a positive spin on the results, they are discouraging.  Quality was generally very good, at least according to CMS’ typical process measures.  More direct health outcomes are missing, but readmission rates were better than average, blood pressure and cholesterol control were also improved.  But any savings were nominal.  For the 32 ACOs with 669,000 beneficiaries, costs rose .3%, compared to .8% for supposedly matched beneficiaries.  The absolute savings, however, were only $33 million and only 13 of the ACOs achieved those.  There was no accounting for the costs related to implementing the program, which can be substantial for both CMS and the providers.  The lack of financial success for CMS’ ACO program is demonstrated by the fact that a significant number, at least nine, of the pioneer ACOs have dropped out of the program.  For many provider organizations, the financial expense and work activities needed to meet the requirements of being an ACO simply won’t be justified by the potential additional reimbursement.  On a net basis, most will likely be financial losers.  And unfortunately in our system, just getting better quality isn’t enough to continue a program or initiative.

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