Medicare provides insurance to approximately 55 million Americans. Most beneficiaries are 65 or older, and many receive their health care from multiple doctors, hospitals, and other providers. Accountable Care Organizations, or ACOs, are a provision of the U.S. Affordable Care Act and a model to create incentives for providers to voluntarily work together to deliver high quality, coordinated care to patients while reducing costs.
Successful ACOs put patients at the center of the health care system by making sure patients get the care they need while avoiding unnecessary and wasteful services. Patients benefit from receiving higher quality and coordinated care while maintaining the freedom to choose their medical care providers, and providers benefit by sharing in the cost savings that are generated by the ACO.
Although the concept of ACOs may be straightforward, designing them within the context of the broader U.S. health care system is complex.
Designing and Implementing a Model that Serves Patients, Providers, and the Medicare Program
For more than 20 years, we have worked with the Medicare program to develop and refine the present-day ACO model. Our work began with Physician Group Practice (PGP) demonstrations—a precursor to ACOs, which our economists and health policy experts helped develop and evaluate. Our 2014 assessment found that these early PGP demonstrations resulted in Medicare cost savings, improving quality of care for beneficiaries. They also served as a test bed for RTI to help CMS refine the current ACO concept.
It is a complex endeavor to make ACOs simultaneously work for the Medicare program, health care providers, and patients. For the past five years, we have worked with CMS to design and implement critical operational elements to help make ACOs successful. Specifically, we’ve been working on the Medicare Shared Savings Program—the largest of the ACO implementation models. In 2016, the Shared Savings Program included 432 participating ACOs serving more than 7 million Medicare beneficiaries.
In our role as the program analysis contractor, we help design and calculate financial and quality performance across the Shared Savings Program and provide technical assistance to participating ACOs. Our team of financial analysts, quality analysts, and computer programmers helps CMS determine how well an ACO is performing. We assign patients to the ACOs, compute financial and quality benchmarks, and determine if actual ACO financial and quality performance exceeds their benchmarks. We also produce reports that provide ACOs with feedback on their performance.
Because ACOs operate on the premise that providers will improve quality and efficiency of care if they are held financially accountable for outcomes, ACOs are evaluated on specific performance metrics, including, for example:
- Provision of preventive health care
- Delivery of evidence-based care for the chronically ill
- Patients' ratings of how well their doctors communicate with them
- Percent of ACO primary care physicians who use electronic medical records
- Hospital readmission rates
- Documentation of current medications in the patient's medical record.
These metrics incorporate feedback from patients and data from other sources. When participating ACOs achieve both quality standards and minimum savings targets, they are eligible to share in the savings they generate.
Promising Results with Improved Quality at a Lower Cost
Our work to implement ACOs is making a real difference in controlling costs related to improving health care. In August 2016, CMS announced that ACOs improve the quality of care for patients and generate financial savings. As the program has matured, more ACOs have successfully generated savings above their minimum target each year. In 2015, 31 percent of Shared Savings Program ACOs generated savings above their minimum savings target compared to 28 percent in 2014 and 26 percent in 2013. Shared Savings Program ACOs that reported quality in both 2014 and 2015 improved on 84 percent of the quality measures reported in both years.
These results suggest that ACOs are delivering higher quality care to more and more Medicare patients each year. Further, evidence shows that as ACOs gain experience they tend to perform better. The total savings generated by ACOs also increased from more than $411 million in 2014 to more than $466 million in 2015.
As ACOs have continued to demonstrate success, RTI’s role in supporting the CMS and ACO programs has also grown. In September 2016, the CMS awarded a five-year contract for RTI to continue working with CMS to design, implement, and operate ACOs. As we continue this work, we remain dedicated to helping our client achieve its goals for improving the quality of health care while lowering costs to patients and taxpayers.