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Our Take Special Issue: An update on ACO performance

Sep 10, 2018

A trove of data and new research on accountable care organizations was recently released. This week’s Our Take tells you what you need to know.

Next Generation ACOs
In late August, the National Opinion Research Center (NORC) at the University of Chicago released the results of the first performance year (2016) for CMS’ Next Generation ACO (NGACO) model. In 2016, there were 18 active NGACOs, comprising 31,070 providers and 477,197 aligned beneficiaries. The average NGAGO served about 25,000 beneficiaries.

According to NORC’s research methodology, NGACOs reduced aggregate spending by $100 million (1.7 percent), or $18.20 per beneficiary per month. Of the 14 NGACOs that had shared savings, four of them represented more than half (57 percent) of the savings. Much of the savings was attributed to reduced spending on post-acute care, particularly on spending at skilled nursing facilities (SNFs). The researchers found statistically significant reductions in the number of inpatient hospital days and nonhospital evaluation and management visits per month, and increases in the number of annual wellness visits among NGACO providers.

The researchers noted that “primary care providers are critical to value-based purchasing models because of their focus on preventive care and comprehensive care management. Alongside strong relationships with providers and strategic composition of provider networks (e.g., to enable access to specialty care), partnerships with SNFs and other post-acute care facilities may be an important component to success.”

Medicare Shared Savings Program
Also in late August, CMS released its MSSP ACO public-use data file for 2017, which includes financial performance and quality scores for 472 ACOs, representing nearly 9 million beneficiaries. MSSP ACOs had shared savings in 2017 of $1.1 billion, or about $185 per beneficiary. After factoring in the bonuses paid to MSSP ACOs, the program saved Medicare an estimated $314 million. In total, 162 ACOs (34 percent) generated shared savings, while only 11 had shared losses.

Top performers by shared savings were Palm Beach ACO ($63.1 million), AMITA Health ACO ($59.8 million) and Scottsdale Health Partners ($46.2 million). When measured by shared savings per beneficiary, leading ACOs were New York City-based Balance ACO ($6,676), Ocala, Fla.-based Physicians ACO ($2,263) and Troy, Mich.-based USMM Accountable Care Partners ($2,227).

NEJM study
According to a new study published in The New England Journal of Medicine (NEJM) by Harvard Medical School researchers, physician-group ACOs outperformed hospital-integrated ACOs during the first three years of the MSSP (2013–2015). Using research methodology similar to the NORC analysis of NGACOs, the researchers analyzed differences in savings during the three-year period between hospital-integrated ACOs and those led by physician groups. Their conclusion: “Spending reductions in physician-group ACOs constituted a net savings to Medicare of $256.4 million in 2015, whereas spending reductions in hospital-integrated ACOs were offset by bonus payments.”

The researchers also found that the physician-group ACOs’ performance improved with experience. In 2015, physician-group ACOs that started in 2012 had $474 in savings per Medicare beneficiary, compared with $342 for those starting in 2013 and $156 for those starting in 2014.

Our Take: The NORC study suggests that NGACOs rooted in an integrated delivery system (IDS) may outperform those based in a physician group. “An IDS may offer greater capacity to support care coordination and management across settings, as its organizational features (e.g., governance structure, health IT and analytics systems) may be less fragmented than non-IDS ACOs,” they wrote.
That contradicts the findings from the Harvard study, which found that physician-led ACOs are outperforming IDS-based ACOs.

However, the NORC researchers noted that IDS-based NGACOs in their sample had more years of experience than did those anchored by a physician group. So, as one might think, experience is a key indicator of success for any ACO model.

In a recently proposed rule, CMS suggested reducing the amount of time ACOs spend in the shared savings model before they assume downside risk, from the current six years to two years. CMS also proposed cutting shared savings from 50 percent to 25 percent for ACOs that take on upside risk only. Both measures would assuredly discourage participation in the program.

What’s behind the proposed changes is CMS Administrator Seema Verma’s belief that there are a lot of freeloading ACOs out there that aren’t taking on their fair share of the risk.

A salient point the Harvard researchers brought up in the NEJM article is that Track 1 ACOs—those that don’t take on downside risk—are still able to reduce Medicare spending. They warned that pushing ACOs into assuming risk too quickly will discourage participation in a model that appears to be working.

“Moreover, our findings suggest distinctive benefits from MSSP participation that could erode if policy changes, such as requiring ACOs to assume downside risk after fewer years of participation, cause more ACOs to leave the program,” the researchers wrote.

There is a growing consensus that the ACO model can be an effective means to keep costs in line and improve patient satisfaction. At the very least, being part of an ACO orients an organization toward quality improvement—specifically with regard to patient populations in need of attention.

In other words, while by no means perfect, ACOs are proving over time that they can be a means to achieving the Triple Aim—which was entirely the point in the first place.

What else you need to know
The generic drug company that seven major health systems are forming has a new name and a new CEO. Civica Rx, previously known as Project Rx, is organized as a Delaware corporation, with its headquarters in Salt Lake City, Utah. Its founding members include Catholic Health Initiatives, HCA Healthcare, Intermountain Healthcare, Mayo Clinic, Providence St. Joseph Health, SSM Health and Trinity Health. Martin VanTrieste, who was previously Amgen’s chief quality officer, will lead the new company and has agreed to do so without compensation. The company expects its first products to be available in 2019. More here.

CMS announced that it will begin “indication-based formulary design” for Medicare Part D drugs. Beginning in 2020, the Part D program will allow plans to allow or exclude drugs based on a particular indication. The agency announced the change in a memo issued to Part D plan sponsors last week. “The ability to exclude drugs from their formulary for specific indications will provide additional negotiating leverage with manufacturers, which can ultimately reduce beneficiary and program costs,” the memo stated. More here

HCA Healthcare and Asheville, N.C.-based Mission Health announced a definitive agreement for HCA to acquire substantially all of Mission Health’s assets for $1.5 billion. According to the agreement, nearly all Mission Health facilities and clinics will retain the Mission brand. Seven hospitals are included in the transition, including the 763-bed Mission Hospital in Asheville. More here.

El Segundo, Calif.-based Verity Health filed for bankruptcy, Reuters reported on Aug. 31. Biotech billionaire Dr. Patrick Soon-Shiong acquired Verity Health’s management company in 2017, pledging to turn the organization around. Verity CEO Richard Adcock told Reuters that he expects the health system to remain in bankruptcy for a couple of years while it restructures and talks with potential buyers. Verity operates six hospitals in Northern and Southern California. More here.

Several notable health care mergers were completed recently. Tampa, Fla.-based WellCare Health Plans completed its acquisition of Meridian Health on Sept. 1. Northwestern Memorial HealthCare and Center Health System also closed their merger on Sept. 1. Bon Secours Health System and Mercy Health of Ohio completed their merger on Sept. 5, creating a new Cincinnati-based integrated delivery system named Bon Secours Mercy Health.

What we’re reading
Direct Primary Care: One Step Forward, Two Steps Back. JAMA 8.21.18 (subscription required)
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