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Measuring What Matters for ACOs

  • Elliott S. Fisher

    Director, The Dartmouth Institute for Health Policy & Clinical Practice

  • Elliott S. Fisher

    Director, The Dartmouth Institute for Health Policy & Clinical Practice

More than 55 percent of the U.S. population now lives in a local area with an accountable care organization (ACO), in which a group of providers is held accountable by a payer for the total cost and quality of care for a defined set of patients. The spread of ACOs, however, by no means ensures their success. Significant questions remain about whether the goals of the model—better care at lower costs—will be achieved.

There are some signs that the ACO model—by rewarding provider organizations for implementing high quality mechanisms for care delivery that lower overall costs—is driving innovation in the marketplace. For example, the Montefiore ACO in New York City is using special scales in the homes of patients with congestive heart failure to monitor for changes in weight that could indicate trouble. Walgreens has formed three ACOs and is using its retail pharmacies as low-cost care centers. In addition, the Beth Israel Deaconess Care Organization created a high-touch care management system in which nurse practitioners visit the ACO’s sickest patients at home to reduce the number of hospital readmissions.

Yet, there are also challenges inherent in the adoption and implementation of the ACO model. There have been several wide-ranging proposals on how to enhance accountable care, especially in Medicare, but we believe that developing policies to standardize measurement is an important first step.

First, we need to promote adoption of a core set of effective measures across payers. Current measures, such as screening for high blood pressure, are limited in scope and fail to incorporate important dimensions, including health outcomes meaningful to patients and the total cost of care for those within the ACO. Proposals for more advanced measures have been developed but not yet adopted, in part because of provider concerns about being held accountable for aspects of performance they do not fully control. These issues could be addressed by operationalizing the concept of “shared accountability” through patient engagement and partnerships, as with local, multistakeholder community health coalitions, and embracing a core set of more challenging and meaningful metrics, such as functional health and total costs per capita.

Once we have effective measures, we need to ensure all payers are using the same metrics. Today, payers each use different performance metrics in their ACO contracts, which can make it difficult for ACOs to engage in effective self-monitoring and hold their own providers accountable as they try to juggle multiple cost and quality goals. Attempts by ACOs to promote alignment across payers during the contract negotiation process—in many cases using the Medicare Shared Savings Program quality metrics as the baseline—are often unsuccessful because of lack of incentives and an effective standard. Additional funding is needed to test value-based measures for ACO contracts, and the federal government can eventually take the lead in disseminating these measures through its ACO programs.

Second, we should mandate—or at least encourage—the collection and aggregation of under-65 claims data. Medicare data are readily available for tracking the impact of ACO formation and performance, but we have almost no insight into what is happening for the commercially insured and Medicaid populations. Less than a dozen states currently have all-payer claims databases, and very few of these states report information publicly on the total cost of care.

Consolidation through the formation of ACOs is likely to have varying effects on care, prices, and spending across markets. Without transparent information on outcomes and costs, consumers and purchasers have no way to assess value, and it will be impossible to evaluate ACO implementation regionally or nationally. We are effectively flying blind.

To improve transparency, Congress can establish incentives to encourage plans to provide their claims data to independent organizations capable of tracking, analyzing, and reporting performance at regional and aggregated provider levels (i.e., for ACOs and hospitals, not individual physicians). Congress can also prohibit the clauses in contracts among suppliers, providers, and health plans that forbid sharing information on actual prices paid for services and that impede public reporting of meaningful information on the total cost of care.

In short, the importance of practical and accurate measurement of ACO performance cannot be overstated. We can’t afford just to look where light from the lamppost is now shining: we need better measures, and we need to know what is happening beyond Medicare.

Publication Details



E. S. Fisher, W. L. Schpero, J. M. Corrigan, Measuring What Matters for ACOs, The Commonwealth Fund Blog, January 2014.