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Experts clash over whether accountable care organizations save money

Opponents claim ACOs haven't produced real savings, while those in favor say they show promise and need time to develop.

Jeff Lagasse, Associate Editor

Experts are clashing over whether accountable care organizations have lived up to expectations, according to commentaries published in the Journal of the American Medical Association.

Detractors claim ACOs have failed to produce adequate cost savings and efficiencies, while proponents say the early evidence points to increased quality.

Kevin Schulman, MD, of Duke University School of Medicine and Harvard Business School, and Barak Richman, of Duke University School of Law, said they aren't impressed with the early findings, pointing to a trio of published evaluations that suggest less-than-ideal efficiencies generated by ACOs.

The first, a comprehensive evaluation of the performance of Pioneer ACOs showed savings in the cost of care to the Centers for Medicare and Medicaid Services in 2012 of 1.2 percent. But after accounting for bonus payments, net savings to CMS were a paltry 0.4 percent, and 40 percent of the participating sites ended their involvement in the program after the first year, they said.

[Also: Aetna joins with Duke Health, WakeMed Health & Hospitals for expanded ACO]

A second analysis by CMS showed smaller increases in total Medicare expenditures for ACO-aligned beneficiaries, but the result was substantially reduced by the second year of the program and didn't include incentive costs to ACO participants.

The third report, an evaluation of the CMS Medicare Shared Savings Program, found that the 2012 ACO cohort showed a lower cost of care but triggered CMS bonus payments that exceeded those savings. Then, the 2013 cohort didn't save money at all. Furthermore, none of those evaluations, Schulman and Richman said, considered the costs to implement the ACO.

They concluded that of the several iterations of ACOs, none have meaningfully reduced the cost of care, which begs the question whether the ACO concept itself is sound. This is an important consideration, they said, because ACOs carry a substantial cost to those outside Medicare.

In their view, the ACO model has also accelerated the trend of hospitals acquiring physician practices, enhancing their market power. Consolidation is responsible for sharp price increases across markets within states, they argue, with monopoly hospitals, those that dominate a local market with no real competition, showing 15.3 percent higher prices than hospitals in competitive markets.

[Also: 3 Next Generation ACOs drop out with two citing financial targets as reason]

Since this results in a lack of negotiating power on the part of private health plans, Schulman and Richman said that two strategies have emerged to maintain affordability in the health insurance market: high deductible health plans, and narrow-network health plans with significant cost sharing. Co-payments for care under these offerings are often unaffordable, leading the authors to conclude that the ACO model may have weakened the financial protection that is the core purpose of health insurance, while undermining the Affordable Care Act's goal of expanding coverage.

Schulman and Richman's suggested paying physicians and physician-led groups to keep patients away from and out of hospitals, away from costly facilities and tests, and use inpatient services only when other low-cost mechanisms are not effective.

However, Zirui Song, MD, of the Department of Medicine at Massachusetts General Hospital, and Elliott Fisher, MD, of the Dartmouth Institute for Health Policy and Clinical Practice, see it differently. With limited evidence of the effects of ACO contracts, and most studies containing fewer than two years of follow-up, reversing course so early in ACOs' lifespans would be a mistake, they said -- particularly since evidence on quality has been promising.

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Quality improved in both process and outcomes in the Blue Cross Blue Shield of Massachusetts Alternative Quality Contract, they said, with similar gains for Medicare beneficiaries in ACOs. For example, process measures included adherence with guidelines for screening for colorectal or breast cancer, and follow-up testing for patients with diabetes or coronary artery disease; outcome measures included the proportion of patients with diabetes achieving target blood pressure, lipid levels, or hemoglobin A levels. In both populations, bonuses for ACOs were highly contingent on achieving gains in quality.

Medicare beneficiaries also reported better access to care, and for those with multiple chronic conditions, much higher subjective ratings of the overall quality of care. That evidence, Song and Fisher contend, is grounds for "cautious optimism."

They maintain that opportunities for making the model more attractive involve supporting a gradual transition to reasonable risk-bearing that offers greater financial rewards for physicians. They also advocate a transition to enterprise liability, wherein the ACO, not the individual physician, would be liable for malpractice claims.

More clarity is needed to determine ACOs' efficacy, they said -- and the only thing that can deliver that clarity is time.

Twitter: @JELagasse

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