More on Accountable Care

Downside risk contracts still less common for ACOs, study finds

The proportion of ACOs taking on downside risk remained relatively stable, with the majority in upside-only risk contacts.

Jeff Lagasse, Associate Editor

While the number and variety of contracts held by Accountable Care Organizations have increased dramatically in recent years, the proportion of those bearing downside risk has seen only modest growth, according to a new study published in Health Affairs.

ACOs, which use financial incentives in an effort to improve patient care and reduce healthcare costs, have become one of the most commonly implemented value-based payment models by payers. In 2018, there were more than 1,000 ACOs nationally, covering an estimated 33 million lives and including more than 1,400 different payment arrangements.

Yet debates about the impact of the ACO model persist, especially pertaining to the contribution of downside risk, in which ACOs share responsibility for financial losses with payers if the former fail to meet their targets.

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To help improve understanding of the rapid growth and evolution of ACOs, the research team analyzed ACO structure and contracts over a six-year period from 2012-2018, using data from the National Survey of Accountable Care Organizations.

They found that while the number of ACOs had grown fivefold during that time period, the proportion of ACOs taking on downside risk remained relatively stable -- increasing from 28 percent in 2012 to 33 percent in 2018. Overall, the majority were upside-only risk contracts, which reward cost and quality improvements but do not financially penalize poor performance.

There's concern among industry experts that these kinds of contracts might not provide adequate incentives to boost ACO performance.

When examining the leadership, services and size of ACOs, the researchers said those bearing downside risk were less likely to be physician-led or physician-owned, more likely to be part of larger, integrated delivery systems (that included hospitals), had more participating physicians, and were more likely to provide services such as inpatient rehabilitation, routine specialty care, and palliative or hospice care.

In addition, the authors found that ACOs with downside risk contracts were more likely to have participating providers who had experience with other forms of payment reform, such as bundled or capitated payments, and had more ACO contracts across payer types -- Medicare, commercial and Medicaid.


The authors said increasing the number of ACO payment contracts per ACO suggests a broadening of financial incentives around value-based care, but that there's been "stagnation in the proportion of ACOs with deeper financial incentives." In 2018, just one-third chose contracts with downside risk.

CMS recently issued a rule mandating that ACOs take on financial risk sooner.

Twitter: @JELagasse

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