The Number of ACOs Continue to Grow, but Mainly in the Private Sector

Accountable Care Organizations (ACOs) are now operating in 45 states and the District of Columbia.  As of May 31, 2012, 221 ACOs have been identified by Leavitt Partners, who have been conducting research in the development and operation of ACOs.  Since November of 2011, there has been a 38 percent increase in the number of ACO organizations, according to Leavitt.  Of the 221 ACOs, only 59 are participating with Medicare which means that the private sector is outpacing Medicare in the development of ACOs by 4 to 1.

The goal of an ACO is to develop a group of providers who are being reimbursed, in part, for reaching quality benchmarks.  ACO’s seek to both improve health outcomes and decrease the growth in health care expenditures.  The Patient Protection and Affordable Care Act (PPACA) (P.L. 111-148) instructed CMS to start participating in ACOs and other shared savings programs. 

Geographic Location and Sponsoring Entities of ACOs

 Leavitt Partners found that ACOs are currently mainly located in large metropolitan areas.Californiahas the largest number of ACOs followed by Texas, Michigan, Massachusetts, Ohio, Wisconsin and Minnesota. Leavitt Partners also found that a few urban areas have more than one ACO competing against each other with the most intense competition being in Los Angeles and Boston.

 The majority of ACOs have been developed and sponsored by a hospital system.  Hospital systems sponsor 118 ACOs.  The development of ACOs by physician groups, however, nearly doubled in the last six months and accounts for the great majority of ACO growth. Leavitt Partners could identify 70 ACOs that were sponsored by physician groups.  ACOs sponsored by payers continue to the smallest group consisting of only 2 ACOs developed and sponsored by private insurance companies.      

Insurers though are playing an increasingly larger role in developing ACOs including (1) investing in competencies that enable care coordination, and (2) promoting and sponsoring risk-based arrangements with small and large provider organizations.

 Most ACOs, 67 percent, consist of one provider and those are usually integrated delivery systems.  These organizations receive payments for a population and takes on the responsibility of providing accountable care. Forty-three ACOs are multiple provider organizations usually a hospital and one or more physician organization. 

Medicare Involvement

 An ACO participating in Medicare will most likely be a network of provider groups, often affiliated with a hospital, that work together and are jointly responsible for the cost and quality of care provided to Medicare beneficiaries. For an ACO to participate in Medicare it must have at a minimum 5,000 beneficiaries.

 Medicare ACOs are dissimilar from private ACOs in many ways.  Private ACOs appear to be more flexible and are experimenting with more varied payment and risk-bearing models, Leavitt reported. It is likely that the success or failure of the private models will influence the direction that the Medicare accountable care program takes.  While some private ACOs have actively endorsed the shard savings concept being used by Medicare, preliminary interviews conducted by Leavitt Partners indicate that the Medicare shared savings model is likely a temporary step towards something different. Medicare’s accountable care programs are an outgrowth of the private sector movement, not a driving force behind it as the vast majority of ACOs and accountable care models have arisen from the private sector.