Problems with ACOs

I’ve been meaning to get to this paper for a few weeks. “Outpatient Care Patterns and Organizational Accountability in Medicare“:

Importance Fostering accountability in the Medicare Accountable Care Organization (ACO) programs may be challenging because traditional Medicare beneficiaries have unrestricted choice of health care providers, are attributed to ACOs based on utilization, and often receive fragmented care.

Objective To measure 3 related constructs relevant to ACO incentives and their capacity to manage care: stability of patient assignment, leakage of outpatient care, and contract penetration.

Design, Setting, and Participants Using 2010-2011 Medicare claims and rosters of physicians in organizations participating in ACO programs, we examined these constructs among 524 246 beneficiaries hypothetically assigned to 145 ACOs prior to the start of the Medicare ACO programs. We compared estimates by patient complexity, ACO size, and the primary care orientation of ACO specialty mix.

Main Outcomes and Measures Three related construct measurements: stability of assignment, defined as the proportion of patients whose assignment to an ACO in 2010 was unchanged in 2011; leakage of outpatient care, defined as the proportion of office visits for an assigned population that occurred outside of the contracting organization; and contract penetration, defined as the proportion of Medicare outpatient spending billed by an ACO that was devoted to assigned patients.

Here’s problem #1: Of all the beneficiaries assigned to ACOs in 2010, only 80% were assigned to the same ACO in 2011. Of those assigned to an ACO in 2010 or 2011, only 66% were assigned to the same ACO in both years.

Problem #2: Beneficiaries likely to have been assigned unstably were either healthier in general or in the highest decile of spending. In other words, the instability is likely to make year-to-year spending per beneficiary in an ACO unpredictable.

Problem #3: About 9% of office visits with primary care docs were outside assigned ACOs. Worse, about 67% of visits with specialists were outside assigned ACOs.

Problem #4: Those who went outside the ACO for care were likelier to be higher-cost patients.

These aren’t problems to be ignored. These are the kind of problems that will sink the ACO experiment. How do you manage patients’ long-term care more efficiently if you don’t keep them year-to-year? How do you prevent them from over-utilizing care if they just go somewhere else to get it when you try?

I’ve always been a bit skeptical about the potential for ACOs to really reduce spending as designed. I’m looking forward to someone making me feel better about this. Please?


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