The 10 reasons accountable care organizations fail

It’s clear that healthcare providers are increasingly recognizing and accepting that value-based payment is here to stay. The tremendous growth in Accountable Care Organization (ACO) arrangements is a testament to this fact.

When properly managed, ACOs present hospitals with the single greatest pathway to operational and financial success. Yet, some new ACOs have found that providing higher quality care and taking advantage of incentives from CMS are harder to achieve than initially expected. As a result, high hopes and the best of intentions can quickly turn into defeat.

Caravan Health has partnered with providers to successfully form and manage ACOs since the creation of the program. Here their experts share the top 10 reasons why ACOs fail.

Number 10: The ACO cannot execute on quality improvement and reporting
As of 2016, ACO providers forfeited $170 million in shared savings because of either negative savings adjustments from lower quality scores or failures to report quality altogether. Quality reporting across multiple participants is inherently challenging. What’s more is continuous quality improvement requires process changes, measurement, transparency and commitment. Without well-designed workflows and responsibilities in place, some organizations are stopping short of this critical step and more are wasting time and money.

Number 9: Doctors are not on board
After decades of getting paid less to do more, clinicians have had enough. ACO programs that lay the administrative burden on physicians are doomed to fail. Successful ACO practices must have a strong support team capable of leading quality reporting and other administrative activities and, in turn, maximizing physician capacity to deliver high quality care. Physicians lead through steering committees that engage them with data and allow them to drive transformation while giving clinic staff the direction they need to succeed on a daily basis.

Number 8: Clinicians can’t get data at the point of care
Powerful ACO claims data is best used by clinicians at the point of care to identify high risk patients, view an accurate patient history, and identify gaps in care and HCC coding. Most ACOs focus on enterprise-wide analytics – which are rarely useful due to statistical variation – instead of making critically important information available at the point of care where it serves patients the most.

Number 7: Practices don’t have staff supporting population health
Support staff, especially population health nurses, are critical to the success of an ACO. Successful ACOs have nurses providing preventive care, such as annual wellness visits, chronic care management, care planning and behavioral health integration – all of which is reimbursed through “incident to” billing. This frees up physician time to lead care teams, creates better quality outcomes and generates significant population health revenue to guarantee the sustainability of the program.

Number 6: ACOs don’t focus on managing patients better than the national fee-for-service average
Many ACO managers believe that they need to drive spending below last year’s levels in an absolute sense – a task that feels impossible at the outset. But it’s not about beating your spending from last year, it’s about beating growth in fee-for-service spending nationally – a much less daunting goal. Successful ACOs manage wellness, prevention and chronic conditions better than the national average to achieve consistent rewards.

Number 5: HCC coding is poor and inconsistent.
Most fee-for-service providers either do not pay attention to HCC coding or do not understand it. Every year a group of ACOs lose their shared savings because average HCC codes for their population decreased solely due to neglect. Simple, robust processes are required to support clinicians and inform them at the point of care of what chronic conditions are present in patients so they can address them during the visit and accurately record the diagnoses.

Number 4: Ignoring behavioral and mental health
Medicare’s most expensive patients have nearly 100% co-morbidity with behavioral and mental health issues, and most ACOs are ill-equipped to handle these patients. Implementing team-based care using new behavioral health integration codes are the key to success.

Number 3: ACO has a lack of accountability and transparency
The “A” in ACO stands for accountable. An ACO needs to have clear visibility into and influence on the actions that physicians and practice managers can control. A scorecard making it clear where a practice is meeting expectations and where it is falling short can be a useful transparency tool to ultimately foster collaboration and achieve common goals.

Number 2: Lack of training and process improvement
From the front office staff to clinicians to senior executives, all members of an organization must understand their specific roles to position the ACO for success. ACOs must invest in committed collaboration and constant assessment and training.

Number 1: ACO does not have enough lives to take risk
By far the biggest obstacle to ACO success is scale. Historic ACO data clearly shows that the most important element of ACO success is the right size. The majority of Medicare ACOs are simply too small to overcome the challenge of statistical variation. An ACO smaller than 100,000 lives cannot predictably demonstrate Medicare shared savings. Why? Because the expected true savings per year, which averages only 0.5 – 1 %, is overwhelmed for any given ACO by statistical noise. This leads to uncertain results. Once an ACO reaches the ideal size, providers can see the results of their efforts and can take risk without fear of writing a check to CMS for no good reason.

Caravan Health offers a groundbreaking collaborative ACO model proven to help providers effectively navigate the challenge of value-based payments and achieve the scale necessary to demonstrate measurable savings for Medicare. This collaborative ACO approach addresses the challenge of unpredictable results and allows organizations to manage risk in a sustainable way. For more information, visit or call 916-542-4582.

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