Some people used to say that accountable care organizations (ACOs) are like unicorns—they sound amazing but nobody has seen one in real life. However, with hundreds of ACOs now sprouting up in an array of shapes and sizes in Medicare, Medicaid, and the commercial sector, this saying has finally been put to rest. Still, until recently, it’s been unclear whether ACOs can live up to the hype or are just a passing health care reform fad. Although the results are preliminary, the experiences of Medicaid ACO programs in Colorado, Minnesota, and Oregon show that this model of coordinating care—and then sharing in the resulting savings with payers—holds real promise.
Medicaid ACO Early Adopters Are Proving Their Worth
The longest-standing Medicaid program is in Colorado, where the statewide Accountable Care Collaborative launched in 2011. While the Colorado program’s Regional Care Collaborative Organizations (RCCOs) are not at financial risk for improving quality and lowering costs (they only share in savings), the state has realized roughly $29 to $33 million in net savings over three years. These savings take into account state investments in data-sharing infrastructure and incentive payments to the RCCOs and primary care medical providers.
In 2012 Oregon launched its statewide Coordinated Care Organization (CCO) program which, like Colorado’s program, created accountable care organizations that are responsible for most Medicaid beneficiaries in a fixed geographic area. These entities assume full financial risk and are responsible for managing beneficiaries’ physical, behavioral, and oral health needs.
Recently released midyear results show encouraging early evidence that the participating organizations are improving quality and lowering costs. Emergency department visits decreased by 21 percent since 2011. The health of beneficiaries with diabetes and chronic obstructive pulmonary disease has improved, leading to a drop in hospital admissions for those patients by 9 percent and 48 percent, respectively. Overall inpatient and outpatient costs also declined, even while primary care and pharmacy expenditures increased, suggesting that patient care is shifting away from high-cost settings and greater use of medications. But not every CCO succeeded on every metric: based on year-over-year comparisons, improvement was mixed for measures like follow-up after hospitalization for mental illness and appropriate treatment of children with pharyngitis.
Minnesota launched its Integrated Health Partnerships initiative in 2013. The partnerships are similar in structure to ACOs participating in the federal Medicare Shared Savings Program and, in fact, several participate in that program as well. In its first year, the initiative achieved savings of $10.5 million across all six initial health care provider participants serving roughly 100,000 Minnesotans. Only three of Minnesota’s six participating organizations, however, achieved sufficient savings to receive a shared savings payment. Exploring the challenges, as well as the achievements of this and other ACOs, will help inform future enhancements to state models.
This early evidence will inform the efforts of a new crop of states working to spread the Medicaid ACO model. With support from The Commonwealth Fund, the Center for Health Care Strategies is convening a learning collaborative of six states (Colorado, Iowa, Massachusetts, North Carolina, Rhode Island, and Washington) that will learn from one another as well as from the early adopters of Maine, Minnesota, Oregon, and Vermont. Maine and Vermont, in fact, launched ACO programs in 2014 as part of the State Innovation Models initiative. We can look forward to seeing results from them sometime this year.
Of course, the devil is in the details, and as results continue to roll in, research will be needed to understand what features of Medicaid ACOs lead to better quality at lower costs. But at the state program level, their performance so far suggests that a functioning accountable care organization is more than a myth.