General topics

The rapid proliferation of Accountable Care Organizations in the US: What’s the secret sauce?

Accountable Care Organizations (ACOs) – the US pendant to our Gesundes Kinzigtal model, striving for better health, better care and higher cost efficiency – have seen a rapid proliferation since their introduction in the 2010 Affordable Care Act (ACA). In just five years they rose from zero to over 700 (total public and private ACOs[1]). Currently over 7.8 million beneficiaries are served in the public programs by the 19 Pioneer model ACOs and over 400 Medicare Shared Savings Program ACOs[2]. That’s nearly the population of the whole state of Baden-Wuerttemberg (The state in which Gesundes Kinzigtal is located). And this fast growth happened, although the regulations for the participation in the ACO program of CMS were really competitive and the methods to measure the savings that would be shared between CMS and ACOs highly disputed. Especially for the 32 progressive accountable care organizations that became Pioneers in 2010, stakes were high, as these organizations also accepted the risk of losses (but also the potential for higher bonuses). Currently this tier of ACO programs has halved. Only 16 are remaining in the program, the others dropped out of it. The reason for that has been in the most cases that they felt that the targets of CMS had not been set right. Efficient ACOs already have less waste they can get rid of and therefore less potential for shared savings. Nevertheless, most of these organizations changed to the regular CMS Shared Savings Program or are currently eying for the new Next Generation ACO program, an “improved” version of the Pioneer Program; but with an even higher risk for losses than in the Pioneer Programs[3].

Also Kaiser Permanente, the role model for ACOs, is expanding and entering new markets[4]. What’s the reason for this atmosphere of departure in the US from the current traditional fee for service models, whereas in Germany the call for population based integrated care is huge, but nothing is really happening in practice? What’s the secret sauce?

From the perspective of the payer it’s a clear picture. The newest 2014 quality and financial performance results of CMS show that ACOs continue to improve the quality of care, while generating more than $411 million in total savings at the same time2. And from the providers point of view? The era of fee-for-service-remuneration seems to come to an abrupt end. CMS sets a new tone for the whole market. The “target is to have 30% of Medicare payments tied to quality or value through alternative payment models [such as ACOs] by the end of 2016, and 50% of payments by the end of 2018.”[5] And also the rest of fee-for-service payments (90%) should be tied to value until 2018. For providers this means that they have to act pro-actively or they will very probably be the loser in this change to value based payment. So is this very clear and strong commitment to change to a value based payment system the “not so secret” sauce for the proliferation of ACOs? Maybe!? At least it can be stated that the unclear signals and lack of commitment to pay for value in Germany did not proliferate any growth of population based integrated care models.


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