ACOs increase shared savings, but quality drops, data shows

University of Texas professor Dr. Indrahil Bardhan speaks on ACO performance at the HIMSS22 conference in Orlando.

Photo: Jeff Lagasse/Healthcare Finance News

ORLANDO, Fla. – The performance of Medicare Accountable Care Organizations has been mixed. When ACOs were first launched, the goal was to save costs and improve quality, with the Centers for Medicare and Medicaid Services offering two models with two distinct levels of risk. Now, data shows that while cost savings do, in fact, occur under both models, quality decreases.

Dr. Indrahil Bardhan, a professor at the University of Texas at Austin, came to that determination after poring over publicly available CMS data, with a focus on the Medicare Shared Savings Program (MSSP) – the oldest and largest ACO program, which began during the early days of the Affordable Care Act.

At the HIMSS conference in Orlando, Bardhan explained during his session, "Do Accountable Care Organizations Create Value? Hype or Hope," that when ACO programs initially debuted, federal agencies established two tracks: one with only upside risk, and one with both upside and downside risk.

Most providers, naturally, wanted to minimize their risk and chose the track with less risk. "But you could not stay in the one-sided track forever," said Bardhan. "If you don't have any downside risk, everybody's going to choose the one-sided risk model. Obviously, there's a carrot and a stick. CMS said, 'You can stay on in the one-sided risk model for up to three years, and then you have a choice: Switch to the two-sided model, or if you don't want to go into the two-sided model, you have to drop out of the model.' It was a binary choice. This was about 10 years ago."

In the intervening years, providers requested additional time. Creating an ACO results in a lot of organizational changes and requires significant money up-front. Combine that with the steep learning curve, and providers were feeling the heat. 

Yet, somehow, after years of scrambling governmental policy changes and wrangling over the amount of time allowed in the one-sided model, ACOs started popping up. For all their complexity, the promise of ACOs was simple: more cost savings, better quality.

But Bardhan's analysis of the CMS data uncovered a curious trend. ACOs saw shared savings dip during the first couple years of implementation, but then, at year three – when they switched from the one-sided risk model to the two-sided model – the shared savings began to climb, showing a statistically relevant rise. 

Quality, however, went down.

"But the quality of two-sided ACOs is still higher than one-sided ACOs, which makes them more attractive if you're a policymaker," said Bardhan. "You see better cost savings at a higher level of quality, though quality does go down overall."

That has implications for policymakers, as does the profile of the providers in the two models. ACOs that opt into two-sided risk models tend to be larger than the ones in one-sided ACOs.

"The rich are getting richer while the poor are getting poorer," said Bardhan. "Some of the ACOs that were already doing well in the first place were the ones getting the cost savings, while some of the ACOs that were not doing well were the ones who were actually lagging behind in terms of cost saving and quality."

The takeaway for Bardhan is that MSSP contracts lack performance accountability, especially when quality goes down after the transition to the two-sided risk models. The question now is how to get ACOs to be less lax on their quality measures.

"We believe that instead of creating shared incentives based only on peer benchmarks, you should also have self-benchmarks," said Bardhan. "You can show that you improved compared to your prior performance. There needs to be appropriate incentives for ACOs to undertake continuous quality improvements, which is not happening today. You need to have continuous quality improvement even after switching to the two-sided models."
 

Twitter: @JELagasse
Email the writer: jeff.lagasse@himssmedia.com