Viewpoint: ACOs don't cut costs for the general population

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While there are 800 to 1,000 ACOs operating in the U.S., available performance data of Medicare ACOs shows few will accept downside risk and "are incapable of cutting costs," Kip Sullivan, JD, a Minnesota policy expert, wrote in The Health Care Blog.

Here are four takeaways from his post.

1. In his opinion piece, Mr. Sullivan writes "anyone paying attention to the research knew even before 2012 that ACOs wouldn't cut costs for a general population (as opposed to a small slice of the population that is very sick)." He points to how one of Medicare's first forays into ACOs, the Physician Group Practice Demonstration, raised costs by 1.2 percent during its five years of operation from 2005 to 2010. The program included well-known participants, such as Lebanon, N.H.-based Dartmouth-Hitchcock Medical Center, Danville, Pa.-based Geisinger Health System and Marshfield (Wis.) Clinic. 

2. Mr. Sullivan also referenced CMS' latest data on Medicare ACOs, which he said "indicate the current crop of ACOs are equally incapable of cutting costs."

"The data contained in the reports indicates the ACO programs are merely breaking even, and that's only if you don't count the costs to the ACOs of doing whatever it is ACOs do," he wrote. Mr. Sullivan said of the 458 ACOs participating in CMS' Medicare Shared Savings Program, the former Pioneer program and the Next Generation program, 90 percent were Track 1. This means they only accepted upside risk, as opposed to both upside and downside risk.

3. Of the eight ACOs remaining in the Pioneer program when it ended in 2016, Mr. Sullivan said data shows the ACOs only cut Medicare costs by seven-tenths of one percent in the program's final year.

4. "The failure of ACO proponents to answer the question, Why do we need both ACOs and insurance companies, is creating problems for Medicare which now has to administer three separate programs — the traditional fee-for-service program, the new ACO program, and the Medicare Advantage (MA) program," Mr. Sullivan adds.

For the full opinion piece, click here.

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