ACOs Multiply As Medicare Announces 27 New Ones

Despite uncertainty over how the Supreme Court will rule on the health law, a key provision intended to help transform the delivery of care is moving ahead.

The Obama administration announced Tuesday that 27 health systems have been selected to participate in Medicare’s Shared Savings Program, which offers financial incentives for physicians, hospitals and other health care providers to team up in “accountable care organizations.”

Advocates say ACOs can improve care for Medicare beneficiaries and slow rising costs by changing the incentives that influence how doctors and hospitals operate. Experts cite as models highly touted health systems such as the Mayo Clinic and the Geisinger Health System of Pennsylvania.

Instead of getting paid for each service ACOs reward providers that are able to manage chronic disease and meet certain quality measures, including reducing hospital admissions and emergency room visits. If they improve care while restraining costs, the systems can share in the savings.

Tuesday’s announcement was the government’s first major health law action since the Supreme Court hearings two weeks ago on challenges to the law and has been highly anticipated by the health care industry. The new ACOs will serve an estimated 375,000 beneficiaries in 18 states.

The Centers for Medicare and Medicaid Services is reviewing another 150 applications from additional ACOs seeking to enter the program in July, suggesting that the Shared Savings Program is moving full-speed ahead.

The program is “off to a very phenomenal start,” said Jonathan Blum, who is a CMS deputy administrator. “We are on track to fundamentally transform the [Medicare] fee-for-service program.”

More ACOs Will Be Approved

Last December, HHS selected 32 organizations to take part in an advanced version of the Medicare program. These “pioneers,” as they’re called, are further along in developing the ACO model, with many already largely functioning as ACOs.

Pioneers began operating Jan. 1, and during their first two years they will assume a greater risk, but with a greater potential reward, than the ACOs announced on Tuesday.

Although some experts expected hospitals to dominate the ACO field, Blum noted that the majority of ACOs announced Tuesday are physician-led organizations. He also said many of the organizations are working with private health insurers to serve patients not in the Medicare program.

Chas Roades, chief research officer at the Advisory Board Company in Washington, D.C., cautioned that as the ACOS take off and “people actually start to deliver care in a different way, it’s messy and complicated. There will be successes and failures, and it may go slower than policy-makers would like it to.”

He says it’s important that CMS create some way for the initial cohort of ACOs to share their data and best practices with one another. “It’s a slow ramp but everyone will be watching very closely to see how these early ACOs succeed,” Rhoades said.

Some ACO leaders say they aren’t worried about the Supreme Court case.

“It’s not changing anything for us,” said Emily Brower, an executive director with Atrius Health, operator of a pioneer ACO in Massachusetts. “This is a model of care we’ve been trying to evolve into since before the pioneer program existed.”

“We’ll continue making investments, and if the law is overturned, we’ll be asking where the return on investment is for us, if not in shared savings,” Brower added. The return on investment “might be in patient growth because our patients become increasingly satisfied with the quality of care we provide.”

Harold Miller, president and CEO of the Network for Regional Healthcare Improvement and executive director of the Center for Healthcare Quality & Payment Reform in Pittsburgh, says ACOs will continue to be the model of the future, even if the Supreme Court strikes down the health care law. The private sector, he says, has been moving in the direction of coordinated care for years.

Miller points out that the Medicare ACO program isn’t “interwoven with the controversial parts of the law,” such as the mandate requiring all Americans to carry health insurance, and should be able to stand on its own. If not, CMS can likely shift the program into a demonstration project without any new legislation.

Blair Childs, senior vice president of public affairs at Premier health care alliance in Charlotte, N.C., adds that ACOs have always been a rare bright spot of bipartisan agreement. Even if the entirety of the ACA is struck down, he argues, Congress is likely to pass additional legislation to continue both the Shared Savings and Pioneer programs.

But Stephen Nuckolls, CEO of Coastal Carolina Health Care in New Bern, N.C., said the organization’s ACO “would not have the incentive” to institute new services without the law and its funding.

Nuckolls nonetheless says he’s confident about the future. “This part of the law is one of those areas that, even if the law is struck down, I think both parties will come together to reinstate it,” he said.

Shane Carter, CEO of Jackson Purchase Medical Associates in Paducah, Ky., is also optimistic. “The positives are enough that regardless of whether or not there’s a formal program, we’ll continue working” toward an ACO, he said. “We’re in it, and we’re going for it.”

Medicare Shared Savings Program ACOs

 This article was produced by Kaiser Health News with support from The SCAN Foundation.