In the continuing drive toward a higher-performing health system, and to reposition themselves in a changing health care marketplace, hospitals and physicians are forming accountable care organizations (ACOs). In so doing, they are forging contractual relationships with payers that reward achievement of shared goals for health care quality and efficiency.
The Affordable Care Act established ACOs—initially a private-sector innovation—as a delivery system option for Medicare. As of January 2013, more than 250 ACOs have contracted with the Centers for Medicare and Medicaid Services (CMS) to cover more than 4 million Medicare beneficiaries. A small but growing number of state Medicaid programs are also implementing or exploring ACO-type arrangements, to coordinate care and restrain cost growth as they prepare to expand eligibility under the health reform law. Though the total number of ACO arrangements in the private and public sectors is difficult to estimate, recent findings from surveys and evaluations suggest that the U.S. health care system is at the beginning of the ACO adoption curve.
While specific arrangements vary, the basic ACO model involves a provider-led entity that contracts with payers, with financial incentives to encourage providers to deliver care in ways that reduce overall costs while meeting quality standards. ACOs rely on assignment of enrollees to primary care medical homes, communication among providers, strong management of high-risk patients across the continuum of care, and extensive monitoring of performance measures.
Although ACOs are in their infancy, early results suggest modest savings and significant promise. Health care researchers and planners are therefore stressing the importance of learning from early adopters—particularly how they are transforming the delivery of care, designing incentives and sharing rewards with providers, and tackling a multitude of challenges.
This report describes the experiences of seven hospital–physician organizations that have created ACO-type entities and begun risk-sharing arrangements with public and private payers, or will soon start them. Covered populations include formerly fee-for-service Medicare patients, a health system’s own employees, enrollees in commercial health plans, Medicaid beneficiaries, or a combination.
Based on interviews with leaders of hospitals and physician groups, we explore the changes in health care delivery and payments that ACOs have pursued, the challenges they face, and their expectations for next steps. We describe the strategies for clinical integration and practice management that ACO administrators view as most promising, and present some early results. We also identify lessons for other organizations considering embarking on an ACO. Finally, we suggest insights for policymakers seeking to learn how public policies and incentives can spur hospitals and physician groups to participate in accountable care programs.