It’s an understatement to say that there is still much skepticism surrounding Accountable Care Organizations. The ACO program was launched by the Centers for Medicare and Medicaid Services, (“CMS”) in January, 2012 when 32 “Pioneer” ACOs commenced operation. In April of 2012, 27 new Medicare Shared Savings Program ACOs were announced, followed by 88 more ACOs in July, 2012 and finally 106 new ACOs were added in January of this year as the ACO program continued ramping up. As a consequence, CMS estimates that more than 4 million Medicare beneficiaries nationwide currently have access to medical care through ACOs. A recent Oliver Wyman press release states that ACOs now serve 14% of all Americans, with more than half of the U.S. population now living in localities served by ACOs. The numbers are increasing rapidly and the program has been in operation for less than 18 months. Commercial plans modeled after ACOs, such the Blue Cross Organized Systems of Care, will make these numbers even larger. “Get On Board Or Get Left Behind” is a theme repeatedly heard from health care consultants.
Yet, a February 18, 2013 Wall Street Journal Op-Ed piece trumpeted “The Coming Failure of Accountable Care,” and a recent survey of 1,200 physicians by Locum Tenans.com revealed that 40% of respondents said they would not be willing to participate in an accountable care arrangement. The view of many health care providers regarding ACOs ranges from “wait and see” to deep skepticism. Some believe that ACOs are simply the latest iteration of the 1990s HMO and are doomed to failure. What is the correct view? Is the ACO here to stay, or will it be gone tomorrow?
Abundant evidence supports the view that the ACO model will be with us into the foreseeable future. Why? You’ve heard it before, but it bears repeating: the current health care spend in the United States is not sustainable—it hovers at around 18% of GDP today and Kaiser Health News reports that it is projected to reach about 20% of GDP by 2021. Multiple trends are gaining momentum simultaneously to address this problem: the shift away from fee-for-service to fee-for- results; the rise and spread of population health management by which providers take responsibility for a “population” of patients and assume the risk for their care; the resulting need for consolidation and growth in market share as providers seek more “covered lives” to spread the risk; the drive toward greater clinical integration among providers as a means of developing and disseminating improvements in clinical pathways and evidence-based medicine to improve quality and reduce cost. On the near horizon is Medicaid expansion and the Health Care Exchange in 2014. The small private provider is particularly at risk in this “new world” of health care, but all providers must find a way to address these challenges. There is strength in numbers and size and mission alignment, and the ACO model provides a vehicle to achieve those objectives.
Without question, some ACOs will fail. For example, a tectonic shift in the culture of health care providers will be needed and it remains to be seen whether that shift can occur and, if so, whether it can occur fast enough to impact sufficiently the urgent problem of increasing costs. But the ACO model is a means to that end. However, it’s about much more than just shared savings. It’s about reducing cost and improving quality and enhancing the patient experience. The ACO shared savings are the incentive to help us reach those larger goals.
John A. Anderson is a member of the Business Practice Group of Giarmarco, Mullins & Horton, P.C., where he concentrates his practice in health care law and banking. He is Vice Chairman of the Board of Trustees for Genesys Health System in Grand Blanc, Michigan, has also chaired the health system’s Quality & Safety Committee, and serves on the Board of the Genesys PHO. For more information, you may contact him directly at (248) 457-7182 or firstname.lastname@example.org.