A historically fragmented system of health care delivery in the U.S., where care often has been delivered by multiple providers with little or no coordination, has led to ever increasing issues with access, cost, and quality. A possible solution being encouraged by both public and private payers is the adoption of Accountable Care Organizations (ACOs). The Affordable Care Act (ACA) includes provisions to use Medicare, the U.S. near universal public coverage program for older adults, to implement these models.
What are ACOs?
ACOs are associations of health care providers that work to provide "coordinated high quality care.”1 ACO’s may include a variety of provider organizations such as hospital systems, physician groups, or insurers, but must at a minimum include primary care providers.2 ACOs aim to catalyze value-based approaches to health care by achieving better care for individuals, better health for populations, and slower growth in costs.4
In the Medicare Shared Savings Program (MSSP) established by the ACA, ACOs receive financial rewards from the Centers for Medicare & Medicaid Services for controlling costs while improving care delivery. Benchmark costs are calculated based on per capita Medicare inpatient and outpatient expenditures on beneficiaries assigned to the ACO in each of the three years prior the ACO’s formation.5 ACOs share the savings between expenditures in the benchmark year and in each of three performance years – typically up to 50% based on meeting quality targets.6 ACOs must meet quality performance standards each performance year in four key domains: (1) Patient/caregiver experiences, (2) care coordination/patient safety, (3) preventive health, and (4) populations with chronic diseases.7
Current state of ACOs
In 2012, there were approximately 250 ACOs in the country serving 11% of Medicare beneficiaries.8 When private (or non-CMS) ACOs are included, the numbers of these organizations exceeded 400 in 2013, covering approximately 14% of Americans.8,9 The majority of ACOs are located in larger metropolitan areas and tended to be sponsored by physician-led groups.3,9
Concerns about ACOs
While it is hoped that ACOs will improve care while lowering costs, they could fall short of those goals. First, these models are highly integrated systems that could lead to greater consolidation, and therefore higher prices.2 Second, ACOs are similar to the integrated delivery models of the 1980s that were reimbursed through capitation payments.10 As with the earlier models, the ACO structure may put too much financial pressure on provider organizations and could also negatively affect the quality of care. Finally, since value-based purchasing (VBP) is an integral part of the ACO, success in achieving ACO aims will result, in part, on how successful the VBP model is, something which has yet to be demonstrated.11,1