How ACOs In Rural And Underserved Areas Responded To Medicare’s ACO Investment Model

“To help establish ACOs in more areas of the country, the Centers for Medicare and Medicaid Services (CMS) developed the ACO Investment Model (AIM) to provide participating ACOs with up-front and ongoing monthly payments over 24 months to fund ACO infrastructure investments and staffing. As part of the Medicare Shared Savings Program (SSP), the payments were to be recouped through any shared savings earned by the ACOs that sufficiently decreased costs relative to a financial benchmark, as specified by SSP regulations. Forty-one new SSP ACOs, primarily located in rural and underserved health care markets, joined AIM in 2016.

[..] A majority of AIM ACOs (35 of 41, or 85 percent) used specialized consulting firms (or management companies) to assist with setting up and operating the ACO. Management companies typically coordinated reporting, conducted claims-based analytics, and served as the liaison between the ACO participants and CMS officials. [..] Services included training for care coordinators and patient navigators, population health coaching, learning networks and workshops, analytics support through a centralized health information technology platform, and financial reporting. By contrast, a study analyzing data from the National Survey of ACOs, which surveyed ACOs formed between 2012 and 2015, showed that around one-third of ACOs had a management partner.

[..] we determined that about 90 percent of the 41 AIM ACOs were collections of independent practices rather than large organizations owning many practices. [..] many ACOs were composed of practices that spanned multiple local markets, at least in part as a result of management company involvement. Management companies had the ability to—and did—bring together unrelated entities, sometimes across regions or states to meet the minimum SSP requirement of 5,000 attributed beneficiaries and spread financial risk. Indeed, only around 30 percent of AIM ACOs were composed of participants that were located in geographically proximate counties. While a common perception has been that local coordination of care among providers within an ACO would be a major driver of ACO financial success, ACOs serving relatively small, dispersed, and rural populations may have needed to use other strategies to improve care and earn shared savings.

[..] We found statistically significant reductions across a number of spending components (the following reflect results from the final performance year, 2018), including acute inpatient (-4 percent), hospital outpatient and ambulatory surgery centers (-4 percent), skilled nursing facilities (SNFs) (-8 percent), and home health (-8 percent). This breakdown is similar to that found for programwide savings in the first three years of the SSP among physician group ACOs, which similarly exhibited greater relative reductions in areas thought to be greater sources of wasteful care (for example, postacute facility care) and was not clearly attributable to prevention efforts; admissions for ambulatory care–sensitive conditions were not reduced, and spending reductions were not concentrated among high-risk patients targeted by case management programs. Our findings for AIM are similarly consistent with efforts to directly limit certain types of care use and the much stronger incentives physician practices have to do so. Physician practices do not incur offsetting losses in fee-for-service profits when reducing spending on care provided by hospitals, SNFs, or home health agencies. In short, the less of the care continuum provided by an ACO, the stronger its incentives to lower spending.

[..] We found that AIM resulted in net savings to CMS of $382 million through 2018 (that is, gross savings less earned shared savings and unrecouped payments from CMS)—an average annual reduction of 2.5 percent compared to baseline spending levels.

Many of the ACOs we interviewed were hesitant to take on two-sided financial risk, even at the end of AIM. This is not surprising, given only 54 percent of AIM ACOs earned any shared savings. ACOs rightly viewed one-sided risk-sharing contracts as carrying downside risk, particularly after AIM funding ceased—if they did not generate savings, they would not recoup the costs of trying. ACO leaders cited a host of concerns about: size (in terms of attributed patients), their participant networks, operational capacities to handle the analytics they believed would be necessary to manage risk-taking, and other organizational factors. While management companies played key roles in helping new ACOs operate, only seven of the 41 AIM ACOs (17 percent) had accepted two-sided risk arrangements by the end of AIM in 2018. This suggests that any mitigation of downside risk offered by management companies was prohibitively costly for AIM ACOs without continued investment funding.”

Full post, Scarpati LM, McWilliams JM, McPheron H et al. Health Affairs blog, 2020.11.10

Evaluation of the Accountable Care Organizational Investment Model, Abt Associates in partnership with L&M Policy Research, Insight Policy Research and J Michael McWilliams, 2020 September