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Where Are ACOs Headed?
At this pivotal time in the accountable care movement, future ACO growth will determine whether accountable care moves from a series of exploratory programs toward mainstream adoption across the country. A significant contributor to future growth is the success of today’s ACOs and their continued involvement in the ACO model, which raises the question – how committed are today’s ACOs to the ACO model?
Determining an ACO’s commitment to the model requires an understanding of the organization’s history, its leadership, provider configuration, and long-term vision. While Leavitt Partners frequently interviews ACO leaders to discuss these topics, this type of qualitative measurement is time intensive and can be subjective. To more readily compare levels of commitment across the ACO landscape, proxies, such as the number and size of ACO contracts, can be used. Fortunately, Leavitt Partners maintains a rich database of public and private ACO activity with which we can analyze these proxies.
Leavitt Partners is currently tracking 923 ACOs, representing 1,366 ACO contracts. Using this contract-level data, we set out to investigate whether we could predict an ACO’s commitment (measured by the number and size of their ACO contracts) based on their entrance into accountable care (their first contract). We were particularly interested to examine the differences between ACOs that began in the Medicare Shared Savings Program (MSSP) – Medicare’s primary vehicle for ACO adoption – and those that began elsewhere.
Breaking it Down
We divided ACOs into four groups based on the type of their first contract: 1) MSSP, 2) Commercial, 3) Medicaid, and 4) Non-MSSP Medicare (i.e., Pioneer ACO Model, Next Generation ACO Model [NGACO], and Comprehensive ESRD Care [CEC]). We separated the ACOs into these categories because each type represents different levels of risk, population profiles and size requirements, and payment methodologies, and therefore may attract different types of providers. Next, we determined each group’s average number of active contracts and average number of active lives as of December 31, 2016. We did not include 2017 data because CMS announces the new ACO participants at the start of the calendar year, while Medicaid and Commercial arrangements are created throughout the year.
Finally, we analyzed the data using the Kruskal-Wallis Test, followed by the Conover-Iman Test to determine which pairs of results were significantly different from one another. Only the pairs of numbers listed below were significantly different, therefore, we will only comment on these pairs.
Pairs Found to be Significantly Different
The average number of active contracts shows that many ACOs have entered into additional contracts after their initial arrangement. This number may increase as the more recently-formed ACOs mature enough to take on additional contracts.
ACOs that start with a commercial contract currently have more active contracts and more active ACO-covered lives on average than ACOs that started in the MSSP. While, commercial contracts tend to be larger than MSSP contracts generally, this does not explain why ACOs who started with commercial contracts have more active contracts on average. One reason may be that the MSSP attracts providers who want to test the ACO concept in a model that has clearly-defined payer and provider roles, has been vetted by hundreds of other participants, and is designed for a population with much room for improvement. Providers who begin with commercial contracting often must negotiate the terms of the agreement and demonstrate their ability to improve quality and utilization measures, which may require more investment and effort than the MSSP. However, some ACOs may enter a commercial contract first simply because a private payer in their market is more aggressively pursuing value-based care.
Interestingly, there is not a large difference between the number of covered lives between ACOs that started in the MSSP and ACOs that started in the more advanced Non-MSSP Medicare programs. The inclusion of the CEC–a specialty ACO model for ESRD patients–may be the reason for this, as CEC participants have smaller populations than those managed by the Pioneer and NGACO.
ACOs are “Putting a Ring on It”
The average number of active contracts and active lives of ACOs show that many ACOs have moved beyond their first contract, which may mean they are demonstrating a commitment to the model. This makes business sense. As providers become more comfortable and committed to value-based payment, and as they transform their infrastructures and care delivery practices to optimize their chances of success, they begin to adopt more contracts, with greater levels of risk, and to move more of their patient panels under these arrangements. This is because providers do not generally treat patients differently based on their insurance product. So, if an ACO has invested in new technologies and staff to support population health management, it makes financial sense to reap the benefits of those investments across multiple payers and populations.
Leavitt Partners is known for its expertise in accountable care intelligence, and has been closely monitoring the ACO movement since its inception. As a result of this tracking, we have developed the most comprehensive database of public and private ACO activity available on the market. With this data, we can monitor national ACO growth, examine ACO performance with added insight, and conduct a variety of analyses such as our recent assessment of ACO risk bearing.