Accountable Care Organizations: 2013 Year in Review

2013 represented another year of growth for accountable care organizations, but it also brought a few setbacks to the model's progression. Here is a look back at events that affected Medicare and commercial ACOs, as well as a look ahead to what 2014 may mean for the model.

Medicare

The year started out with a bang, as CMS added 106 new ACOs to its Medicare Shared Savings Program in January. At that point, it was the largest new class of MSSP participants, increasing the total number of Medicare beneficiaries in ACOs to 4 million.

Later in the spring, however, Medicare saw an early ACO-related setback: some disagreement over the timing of the model's pay-for-performance phase. Members of the Pioneer ACO program sent a letter to CMS, asking the agency to delay tying their pay to their performance on quality metrics and to reconsider the Pioneer program's quality benchmarks. In 2012, ACOs received payments for simply reporting on the program's metrics, and the Pioneers were concerned with the scheduled 2013 transition to be paid based on their performance on the metrics. In April, CMS denied the request to delay the pay-for-performance transition.

In July, CMS released the first-year results from the Pioneer program: All 32 Pioneer ACOs improved quality, but just 13 were able to save enough money to share in the savings with Medicare.

In the wake of the mixed-bag first-year results of the program, nine Pioneers announced they were dropping out of the program. Seven of those ACOs planned to transition to the Medicare Shared Savings Program, which is a lower-risk ACO model, while two left the world of Medicare ACOs entirely.

CMS closed out the year by naming 123 organizations to the 2014 class of MSSP ACOs — now the largest new class of Medicare ACOs ever that will cover 1.5 million Medicare beneficiaries.

Notably, CMS has yet to release the first-year results of its Shared Savings Program, despite making an announcement in July stating it anticipated having the results "later this year [2013]."

Commercial payers

The number of ACOs between providers and commercial payers also grew in 2014, though more slowly than they had in the past. Just 35 commercial ACOs were announced through September 2013, according to Leavitt Partners.

Despite the relatively slow growth of commercial ACOs this year, many commercial payers announced plans to dramatically increase their number of risk-based, accountable care contracts in the near future. For example, UnitedHealthcare, the health insurer subsidiary of United Health Group, announced in July 2013 that it plans to double its accountable care contracts over the next five years.

Also, many of the commercial ACOs that in operation since before 2013 released their results this year, and most were encouraging. For example, the ACO formed between Westmed Medical Group in Purchas, N.Y., and UnitedHealthcare and Optum reduced medical costs and improved on nine of 10 quality metrics in its first year. Also, Anthem Blue Cross' four ACO partners in California all improved on patient care metrics in 2012.

Possibilities in 2014 and beyond

The coming year is poised to be yet another year of growth for the ACO model: ACO participation is expected to double by the end of 2014, according to Premier's 2013 Fall Economic Outlook.

CMS will start accepting applications for its 2015 class of MSSP participants this summer, giving more organizations the chance to become Medicare ACOs. Also, in December, the agency announced it is considering opening a second round of applications to its Pioneer ACO program, which currently has only one class of participants. This would further grow the number of the nation's ACOs.

However, there are still hurdles to jump when it comes to further ACO growth. For example, many hospital executives are still skeptical of the model, and 46 percent of them say they have no plans to form an ACO or implement a similar model in the near future.

Additionally, independent physicians have been slow to accept the ACO model, as they are 16 percent less likely to believe accountable care will improve the quality of care, when compared to employed physicians. 

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