It's hard even for the most ardent of optimists to find many silver linings in the new data from the federal government on the financial and quality performance of Medicare accountable care organizations. Created by the 2010 Affordable Care Act, the Medicare ACO experiment has been widely seen as one of the most significant shifts in healthcare delivery in the last few decades.

More than 300 Medicare ACOs are operating across the United States, and they are set up to deliver improved care for assigned seniors while simultaneously saving money compared to the free-for-all of the fee-for-service world. About 220 of those were formed in 2012 and 2013 and reported data in the latest release from the Centers for Medicare & Medicaid Services.

But only one in four saved enough money on patient care to share in savings with the federal government as the program is designed to do, and the quality data show there is a long road ahead in achieving acceptable care standards for chronic diseases like diabetes.

One of the 33 quality indicators on which ACOs are judged measures the percentage of diabetic patients who have a blood glucose level of 9 percent or higher, a relatively low standard to meet in diabetes management. The ACOs reported a mean measurement of more than 22 percent, meaning 78 percent of their patients did not meet the blood glucose standard. Another set of measures is called a diabetes composite, measuring HbA1c, cholesterol, blood pressure, tobacco use and aspirin use. ACOs also underperformed in that grouping, with a mean score of 21.5 percent.

On the other hand, the two measures related to coronary artery disease drug therapy for lowering cholesterol and ACE/ARB therapy for CAD and diabetes produced a more positive story, with ACOs reporting 63 percent of CAD patients on those therapies.

CMS didn't have too much to say on the quality measures, choosing to post the data quietly on its website, while reserving its press release for the financial data showing a total savings to the federal government of $372 million for Year 2 of the program.

While it's only the first year that the quality performance of non-Pioneer ACOs is an open book (Year 1 was for reporting the data only), it may be enough of a downer to prompt at least these two outcomes:

  • Pullouts from the program. Already the largest single Medicare ACO operator in the country, Universal American, the publicly held Medicare Part D company, will cut off investing in its underperforming ACOs. The new data paint a grim picture of Universal American-managed ACOs, with only two of some 30 posting shared savings and most of them underperforming on quality measures. The well-regarded Medicare Pioneer ACO operated by Sharp HealthCare is pulling out of the program, saying though it performed well on its quality measures, it was unfair for its financial performance to be judged on a national standard rather than a regional one. Now, 10 Pioneer ACOs have dropped out of that segment of the program.
  • CMS will change some of the rules around how ACOs are organized and measured. One of the big problems ACOs have is that the beneficiaries assigned to them can see any provider they want, unlike highly controlled HMOs in the other major managed care program, Medicare Advantage. CMS may adjust the way shared savings or risk are computed, and it has already announced changes in the types of measures for 2015.

The September data release won't mean the end of Medicare ACOs in fact, new ones will be announced over the coming weeks for a 2015 start. But like any new system of care, there will be failures and bad investments, and mergers and reorganizations. Commercial ACOs are being formed like gangbusters, and it's quite likely that the diabetics in rural Mississippi who are missing their diabetes target are at least a little bit healthier than they were before they became part of an ACO.

Follow Jane DuBose on Twitter @JaneGDuBoseDRG

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