ACOs Challenged by Unrestricted Patient Choice, Study Shows

Mark Crane

April 22, 2014

Medicare accountable care organizations (ACO) may have difficulty controlling costs and managing patient care because most beneficiaries have unrestricted choice of healthcare providers and can go outside their ACOs for care, according to a study published online April 21 in JAMA Internal Medicine.

One third of Medicare beneficiaries assigned to ACOs in 2010 or 2011 were not assigned to the same ACO in both years. Much of the specialty care received was provided outside the patients' assigned ACO, suggesting "challenges in achieving organizational accountability in Medicare," states the report, authored by J. Michael McWilliams, MD, PhD, from Harvard Medical School and Brigham and Women's Hospital, Boston, Massachusetts, and colleagues.

The beneficiaries who were not consistently assigned to the same ACO included patients in high-risk categories, such as those with end-stage renal disease, chronic conditions, disabilities, and Medicaid coverage. Among ACO-assigned beneficiaries, "8.7% of office visits with primary care physicians...and 66.7% of office visits with specialists were provided outside of the assigned ACO," the authors write. About 38% of the Medicare spending on outpatient care billed by ACO physicians was devoted to assigned beneficiaries.

"Fostering accountability in the Medicare [ACO] programs may be challenging because traditional Medicare beneficiaries have unrestricted choice of health care providers, are attributed to ACOs based on utilization, and often receive fragmented care," the authors write.

ACOs are intended "[t]o foster greater accountability in the traditional fee-for-service...Medicare program," by rewarding participating healthcare provider groups that achieve both slower spending growth and high-quality care, the report states, but unrestricted choice of healthcare providers could "weaken...incentives and undermine ACO efforts to manage care."

Medicare beneficiaries are not required to pick a primary care physician, so Medicare uses utilization rates to assign patients to ACOs, according to the authors.

The authors examined 3 areas of potential challenges in outpatient care: the proportion of patients assigned to an ACO in 1 year who remained assigned the next year, the proportion of office visits outside a patient's contracting organization, and the proportion of Medicare outpatient spending billed by a contracting organization that is devoted to assigned patients. The study included 524,246 beneficiaries enrolled in traditional Medicare in 2010 and 2011 and assigned to 1 of 145 ACOs.

Although the structure of ACOs and their responses to new payment incentives will evolve over time, the study shows "distinct challenges in achieving organizational accountability. Monitoring the constructs we examined may be important to determine the regulatory need for enhancing ACOs' incentives and their ability to improve care efficiency."

The annual flux in patient populations for which ACOs are responsible means care management for specific patients may be diminished. "[L]eakage of outpatient specialty care, particularly among high-cost and medically complex patients, could pose a significant care coordination challenge to ACOs and substantially limit their ability to achieve economies of scope in both patient-specific and systemic approaches to controlling spending," the researchers write.

A Change Is Needed

In an accompanying invited commentary, Paul B. Ginsburg, PhD, from the Sol Price School of Public Policy, University of Southern California, Los Angeles, writes of the need to reduce the role of fee-for-service, "which encourages high volume, and to instead use systems that reward better patient outcomes, such as bundled payments for a populations or for an episode of care."

The Affordable Care Act defined how ACOs are to be paid. "But the legislation essentially left beneficiaries out of the equation, not offering incentives to choose an ACO or to commit — even softly — to its health care providers," Dr. Ginsburg writes. "This absence may severely undermine the potential of this approach to improve care and control costs.

"The results of the study by McWilliams and colleagues confirm the seriousness of failing to link Medicare beneficiaries with ACOs," he notes.

"By creating a formal and mutually acknowledged relationship between ACOs and beneficiaries, health care provider organizations that make the investments needed to coordinate care, manage chronic diseases, and manage population health would be more likely to succeed," Dr. Ginsburg concludes.

The study authors have disclosed no relevant financial relationships. In his commentary, Dr. Ginsburg cited the Bipartisan Policy Centers proposal for a new model for Medicare ACOs. Dr. Ginsburg contributed to the BPC report as a paid consultant.

JAMA Intern Med. Published online April 21, 2014. Article abstract, Commentary extract

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