ACOs increase shared savings, but quality drops, data shows

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University of Texas Professor Dr. Indrahil Bardhan talks about the performance of the COA at the HIMSS22 conference in Orlando.

Photo: Jeff Lagasse/Health Financing News

The performance of Medicare Accountable care organizations has been mixed. When ACOs were first launched, the goal was to reduce costs and improve quality, with the Centers for Medicare and Medicaid Services offering two different models with two different levels of risk. Now, the data shows that while cost savings actually occur in both models, quality actually decreases.

Dr. Indrahil Bardhan, a professor at the University of Texas at Austin, made the decision after looking at publicly available CMS data, with a focus on the Medicare Shared Savings program – the longest running ACO program. and the most important, which started during the first days. of the Affordable Care Act.

During his “Do Accountable Care Organizations Create Value? Hype or Hope” session at the HIMSS22 conference in Orlando, Bardhan explained that when ACO programs debuted, federal agencies established two tracks: one with a single risk on the rise and one with both pros and cons. risk.

Most vendors, understandably, wanted to minimize their risk and chose the less risky route. “But you couldn’t stay on the one-sided path forever,” Bardhan said. “If you don’t have any downside risk, everyone is going to go for the one-tailed risk model. Obviously there’s a carrot and a stick. CMS said, ‘You can stay in the one-tailed risk model. up to three years, and then you have a choice: switch to the two-sided model, or if you don’t want to enter the two-sided model, you have to abandon the model.’ It was a binary choice. That was about 10 years ago.”

In the years that followed, suppliers asked for additional time. The creation of an ACO entails many organizational changes and requires significant funds upfront. Combine that with the steep learning curve, and vendors were feeling the heat.

Yet somehow, after years of scrambling, government policy shifts, and wrangling over time in the one-sided model, COAs began to appear. Despite all their complexity, the promise of the ACOs was simple: more savings, better quality.

But Bardhan’s analysis of the CMS data revealed a curious pattern. The ACOs saw the shared savings drop in the first two years of implementation, but then in the third year – when they moved from the one-sided risk model to the two-sided model – the shared savings started to climb, showing a statistically significant increase.

The quality, however, has gone down.

“But the quality of bilateral ACOs is always higher than unilateral ACOs, which makes them more attractive if you’re a decision-maker,” Bardhan said. “You see better cost savings at a higher level of quality, even though the quality declines overall.”

This has implications for policy makers, as does the profile of providers in both models. ACOs that opt ​​for two-sided risk models tend to be larger than one-sided ACOs.

“The rich get richer while the poor get poorer,” Bardhan said. “Some of the ACOs that were already doing well to start with were the ones that were achieving the cost savings, while some of the ACOs that were not doing well were the ones that were actually lagging behind in terms of cost savings and quality. .”

The takeaway for Bardhan is that MSSP contracts lack accountability for performance, especially when quality declines after the transition to bilateral risk models. The question now is how to get ACOs to be less lax about their quality measures.

“We believe that instead of creating shared incentives based solely on peer referrals, you should also have personal referrals,” Bardhan said. “You can show that you have improved from your past performance. There must be appropriate incentives for ACOs to undertake continuous quality improvements, which is not happening today. You must have an improvement quality continues even after switching to bilateral models.”

Twitter: @JELagasse
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