Fads, crazes, hits, and styles come and go. Looking back, the popular diet, toy, song, or haircut now seems silly. But in the height of its popularity, it was oh-so cool. Healthcare is not immune from short-lived bursts of enthusiasm. Accountable care organizations (ACOs) practically went viral — they infected the U.S. healthcare system and came to a fever pitch.
Policymakers and Goldilocks
ACOs were meant to coordinate care, improve quality, and cut costs. Who could argue with that? But wait a second… the ACO goals sound a lot like the goals set for HMOs decades earlier! That’s because the goals for both were the same. What happened?
When HMOs failed to be the silver bullet to manage care (too often, they were just a new way to finance care), policymakers desperately wanted and searched for a new hero. Those who championed the pay-for-performance (P4P) movement briefly thought physicians should be reimbursed based on outcomes but, predictably, they ran into difficulties with risk adjustment for small patient populations. Oops. So, the policymakers, who felt like they first went “too broad” with HMOs and then “too narrow” with P4P next turned to large groups of providers and thought they were “just right” — which sounds awfully like the fairytale of Goldilocks and the three bears.
Chasing savings is infectious
Why was the Medicare Shared Savings Program (MSSP) established? To save money.
Why did hospitals and providers develop ACOs and enter the MSSP? To share the saved money.
Why have some ACOs exited the MSSP? Because they didn’t save enough to receive bonus payments. And while that’s a bit of an oversimplification, research shows that’s the primary reason.
Why was the MSSP revamped? Because savings fell short of projections.
Will additional ACOs exit the MSSP? If they fail to receive bonus payments, then the answer is yes. And as ACOs are increasingly subject to downside risk, we should expect even more to exit.
Delirious thinking
Who thought creating a new administrative entity called an ACO would yield savings for the system? Developing new structures and processes is costly. And these structures and processes are redundant to those already held by payers. So much for efficiency.
Who thought retrospectively attributing patients to providers based on utilization was a good idea? Providers and patients may be like two ships that pass in the night. And nothing stops Medicare patients from seeking care outside the ACO. So much for care coordination.
Who thought there would be agreement about how to measure cost savings? Should this be historical or relative to the market? Are the changes real — versus statistical noise — or due to an uneven playing field with inadequate risk adjustment? If they are real, are gains sustainable? Lowering cost and improving quality becomes increasingly more difficult over time. Think diminishing returns. This will be a race to the bottom for some and to the top for others. So much for cost savings and quality improvement.
While policymakers tend to think in aspirational blue-sky ways, programmatic success and failure is found where the rubber meets the road.
Susceptible and immune organizations
Many organizations are susceptible to programs promising potential savings. As they say about the lottery, “You have to be in it to win it.” But susceptible organizations come in many shapes and sizes. Some are dressed for success — they are large, have deep pockets, and are coordinated. Others are underdressed for the cold realities of managing care and risk — they are too small and lack the technological and analytical capabilities to be successful. Organizations that were desperate to achieve savings likely did not have the financial means to make the necessary investments to realize savings.
Some organizations may have been immune to programs promising potential savings. Some may have been successful enough that they did not need or want to jump through new bureaucratic hoops. And some may have had a negative experience elsewhere and wanted to avoid another failure. While the aforementioned research identified reasons why ACOs leave the Medicare program, it would be interesting to also learn why some organizations choose not to enter the program in the first place.
The predictable truths seem to be catching up with the hype. It appears as though the ACO fever has broken, and it may soon be time for cooler heads to prevail. Perhaps the pendulum will swing again and policymakers will find renewed interest in payers, the organizations best equipped to manage care and risk. Or not.
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