The Potential of Medicare Accountable Care Organizations to Transform the American Health Care Marketplace: Rhetoric and Reality

In this issue of Mayo Clinic Proceedings, multiple authors (representing leading health care systems from across the United States) address the approach that diverse US health care delivery organizations are employing to simultaneously reduce health care costs and improve health care quality.^{,  ,  ,  ,  ,  ,}  The efforts are interpreted through the lens of the accountable care organization (ACO) component of the final rule for the Medicare Shared Savings Program under the Patient Protection and Affordable Care Act.

Donald Berwick, the former administrator of the Centers for Medicare and Medicaid Services (CMS) who launched its ACO program, defined ACOs as “voluntary groups of physicians, hospitals, and other health care providers that are willing to assume responsibility for the care of a clearly defined population of Medicare beneficiaries attributed to them on the basis of patients' use of primary care services.” The benefit such organizations receive in exchange for this assumption of risk is that “[i]f an ACO succeeds in both delivering high-quality care or improving care and reducing the cost of that care below what would otherwise have been expected, it will share in the savings it achieves for Medicare.” To date, CMS has defined 2 mechanisms for ACOs, the Pioneer ACO program and the Medicare Shared Savings Program, the primary differences between which are that the Pioneer model allows the ACO to move more rapidly from a shared savings payment model to a population-based payment model and generally applies a higher level of shared savings and risk. The fact that only 32 Pioneer ACOs and 27 first cycle Medicare Shared Savings Program ACOs had participated in the Medicare ACO implementations nationwide by the end of June 2012 (see Figure) indicates that, as national health policy expert Len Nichols suggests in his accompanying commentary, (1) most health care organizations were reluctant to move from fee-for-service to outcomes-based payment models without more protection and support and/or (2) most health care delivery organizations across the United States judged that neither the Medicare Shared Savings Program nor the Pioneer ACO model is among their most effective initial strategies for reducing health care costs while improving health care quality. The much larger second cycle of Shared Savings ACOs (89 organizations) that CMS announced on July 9, 2012, might indicate that these perceptions are changing. To shed more light on how heath care delivery organizations have evaluated ACO participation, the Editorial Board of Mayo Clinic Proceedings invited commentaries from several regional health care system leaders, and their responses fell into 3 categories: their organizations either (1) adopted the Pioneer ACO model, (2) adopted the Medicare Shared Savings Program model, or (3) adopted neither.

A topic of considerable interest to the long-term success of ACOs is why many health care organizations have declined the opportunity to participate in the Pioneer ACO and Medicare Shared Savings Program. The collection of commentaries in this issue of Mayo Clinic Proceedings, therefore, includes 3 from organizations explaining why they chose not to participate. As described in the commentary of Robert Porter and Amanda Tosto, St Louis–based SSM Health Care had concerns about the lack of beneficiary engagement in the ACO models, the timeline the CMS allowed from announcement of the final rule to the application deadline, and the availability of other marketplace options. Health Choice, from Memphis, Tennessee, had concerns about the consequences of retrospective patient attribution in the Medicare Shared Savings Program model. Baylor Health Care System, based in Dallas, Texas, experienced practical barriers to patient enrollment, resulting from the final rule's requirement that patient attribution be based on the physician's tax identification number. The concerns identified by all 3 of these health systems, SSM Health Care, Health Choice, and Baylor Health Care System, evolved after initial enthusiasm about the Medicare Shared Savings Program ACO model as a mechanism for accelerating these organizations' efforts to reduce health care costs while improving health care quality. Many other highly regarded health care systems are in similar positions to these organizations, albeit some of them remaining publicly silent on their concerns regarding the Medicare Shared Savings Program.

On a positive note, Len Nichols observes in his commentary that, while very few health care delivery organizations have decided to be early participants in the Medicare Shared Savings and Pioneer ACO programs, the private sector is moving rapidly to advance ACO-like contracts. A recent report by Leavitt Partners identified 221 ACOs stretching across 45 states and Washington DC, with private sector ACOs outnumbering Medicare ACOs 4-to-1. That these new incentive alignments are as likely to be led by independent physician groups as by integrated health systems is seen by Nichols as evidence that the vision of value-based reimbursement is spreading beyond areas with highly integrated care to the broader health care system. Such actions provide hope for a future in which economic incentives will no longer be detached from, or even at war with, patients' best interests. The US Supreme Court’s decision upholding the constitutionality of the Patient Protection and Affordable Care Act provides some security for the fates of the Medicare ACO programs and the private sector’s parallel initiatives– although political rally cries for repeal of the Act continue to be raised in the build-up to the 2012 election. Regardless of the ultimate outcome, we should not ignore the current opportunity to learn from these activities and health care organizations’ experiences implementing (or not implementing) them. Such study can inform future national and global economic initiatives aimed at lessening health care costs and waste and improving health care value.