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ACOs: Past, Present and Future

By Kindred Healthcare

What is an Accountable Care Organization (ACO)?

The Centers for Medicare and Medicaid Services (CMS) broadly defines ACOs as “groups of doctors, hospitals, and other health care providers, who come together voluntarily to give coordinated high quality care to their Medicare patients.” The ultimate goal of this care coordination is to streamline services and ensure that patients get the right care at the right time with better clinical outcomes. A secondary goal is to create savings to the Medicare program by eliminating duplicate services, medical errors and preventable rehospitalizations.

ACO Performance to Date

The first year featured 23 Pioneer ACOs and 114 Shared Savings ACOs. In late 2013, the Centers for Medicare and Medicaid Services (CMS) released data detailing the first year of performance for all ACOs. Overall data indicates that the ACO model saved the Medicare program $380 million in the first year. However, the data released by CMS does not identify which ACOs were able to produce savings and which ones were not able to reduce costs for patient care.

Cost Savings Slim, But Quality Indicators Are High

While the savings sound significant, analysts were quick to point out that this translates to an average savings of only $80 per each of the 1.6 million beneficiaries covered by these ACOs, or a little less than 1 percent of spending. CMS was quick to point out that,

“On 15 out of 15 quality measures, [the ACOs] did better than national benchmarks, as well as on four out of four patient satisfaction benchmarks.”

Additionally, some analysts further defended the program by pointing out that the savings are a good start and the program is relatively new.

To date, the program has steadily grown by about 100 ACOs each year, with a total of 360 ACOs participating today covering the lives of 5.3 million Medicare beneficiaries.

The Future of ACOs

The initial data just released by CMS represents less than half of current ACOs, so the future of ACO performance, popularity, and the formation of new ACOs will likely rely on consistent positive results. With the first year of data showing a “good start,” experts believe that some groups still considering whether to form an ACO may wait for another full year of data before forming and establishing value-based contracts.

While this may mean that the pace of the formation of new ACOs may be a little slower in 2014, this should not be misinterpreted as a failure of the program.

It is evident that there is much more data that needs to be tracked, over a prolonged period, to truly understand the impact that ACOs are having in terms of quality, value and cost savings. CMS remains confident that ACOs and the partnerships between multiple care providers will improve the patient experience, and ultimately save critical funds for the Medicare program. Therefore, it can be concluded that CMS will continue to encourage participation, provide support for and grow the ACO program.

By Kindred Healthcare