The Trump presidency and Republican-led efforts to repeal the Affordable Care Act have thrown into question the future of U.S. healthcare reform. Major provisions such as the individual mandate, Medicaid expansion and federal tax credits for purchasing coverage off public health insurance exchanges face elimination, while other aspects of the controversial law likely will be rolled back, re-engineered or relabeled under the GOP brand.
Accountable care organizations fall into the second category. ACOs, which are a centerpiece of the ACA and the type of value-based care delivery and payment it promotes, have the capacity, the legal authority and—to a certain extent—the political support to exist outside of the law. In fact, of the nearly 1,300 active ACO contracts currently tracked by DRG, about 37 percent are Medicare ACOs administered by the Centers for Medicare & Medicaid Services. The remainder of ACOs are commercial, Medicare Advantage, Medicaid and hybrid arrangements that operate independently of the federal government. Together, these non-Medicare ACOs manage care for more than 16 million Americans, representing more than 70 percent of all ACO patient lives, according to DRG data.
Even if the ACA were repealed tomorrow, these ACOs aren’t going away. A recent survey by DRG’s Access and Reimbursement team found that 70 percent of MCO pharmacy and medical directors believe ACOs will proceed as normal or flourish if the ACA is repealed. This finding isn’t surprising when you consider that, even before the ACA, payers were keen on shifting financial risk for clinical quality and patient outcomes to providers, a central facet of the ACO model. If anything, repealing the ACA would offer payers greater incentive to ramp up their ACO efforts.
To be sure, ACOs have not lived up to the hype that surrounded the model five years ago, when CMS launched the first rounds of Pioneer and Medicare Shared Savings Program ACOs. Most Medicare ACOs are improving quality and patient outcomes, but only a few are saving money. And while performance results for commercial and Medicaid ACOs are harder to come by, there is no reason to believe they are faring any better or any worse than their Medicare counterparts.
But there are signs of progress. Just this month, a study by the Pittsburgh Graduate School of Public Health and published in the journal Medical Care found ACOs saved Medicare an average of $345 per person in medical costs without driving up prescription drug coverage costs. And in January, CMS announced 99 new ACOs have joined the MSSP, bringing the total number of participants in the program to 480. Among them are the most advanced and innovative provider organizations in the country, many of which are renewing their agreements for the fourth consecutive year.
If the last five years have taught us anything, it’s that ACOs are not the only path to a value-based healthcare system. Other alternative payment models have already begun to grab the managed-care spotlight, including bundled payments and patient-centered medical homes that include a pay-for-performance component for providers. Interest in such models is being fueled by the Medicare Access and CHIP Reauthorization Act, or MACRA. Like the ACA, MACRA is aimed at shifting Medicare care delivery and reimbursement toward quality and value. But unlike the ACA, MACRA has enjoyed strong bipartisan support.
Regardless of what form healthcare reform ultimately takes, providers, payers and industry partners will need to find the value-based model that works for them. And the solution is likely to be a combination of models that takes into account such critical factors as degree of clinical and financial integration, population health management needs and market-level payer dynamics.
This isn’t the end of the line for ACOs. It’s a bend in the long and bumpy road from volume to value.
April Wortham Collins is Senior Manager of Customer Segment Analysis for DRG and an ACO expert. April will be speaking about the future of the ACA and value-based care at the 5th Annual Bloomberg Intelligence Healthcare Summit. Follow her on Twitter at @aprilworthamDRG to learn more on this topic.