Challenges Differ for Hospital-Led, Physician-Led ACOs; Could Drive Departures

April 1—A newly released survey found very different challenges for accountable care organizations (ACOs) depending on whether they are led by physicians or hospitals. The revelation followed an increase in the dropout rate among physician-led entities.

The latest ACO feedback came from a Leavitt Partners survey of 203 such organizations. It found that the leading challenges for physician-led ACOs included:

• Quality of data provided by payers (53 percent)
• Ability to design and implement care delivery changes (38 percent)
• Participation—or the prospect of participation—in mandatory downside risk (32 percent)

In contrast, the leading challenges for hospital-led ACOs included:

• Difficulty aligning physician compensation with value-based contracts (63 percent)
• Ability to design and implement care delivery changes (57 percent)
• Quality of data provided by payers (36 percent)

The survey findings may help explain why more physician-led ACOs departed the Medicare Shared Savings Program (MSSP) at the end of 2018.

Overall, 74 ACOs dropped out at the end of 2018, representing 13 percent of Medicare ACOs. Among small, physician-led ACOs, the dropout rate was 21 percent, according to a recent analysis.

ACO Program Changes

The departures followed an overhaul of the MSSP that aimed to accelerate the transition of participants to downside financial risk.

Ironically, the recent changes aimed to ease participation for smaller, physician-led ACOs. Under the new rules, they theoretically are more likely than hospital-led ACOs to achieve shared savings (and higher per capita savings for Medicare) and to perform better on quality measures (including patient experience measures).

The new rules also allowed more time for low-revenue ACOs to transition to downside financial risk and lowered the cap on downside risk as a share of revenue.

A possible factor in the departure rates of small, physician-led ACOs was the recent finding that only 42 percent of physician-led ACOs will likely qualify as low-revenue (as will only 52 percent of physician-led ACOs with fewer than 10,000 covered lives).

How Departures Match Up with Expectations

Overall departures at the end of 2018 were lower than predicted by the ACO survey, but physician-led departures were greater.

Overall, 47 percent of ACOs reported in the 2018 survey that they were not at all or slightly likely to exit due to mandated downside risk, while 18 percent were moderately likely to exit and 35 percent were very or extremely likely.

The 2018 survey also found ACOs led by integrated systems or hospitals were much more likely to say they would exit the program if required to take on risk, compared with physician-led ACOs (48 percent vs. 18 percent).

How Approaches Differ by ACO Type

Physician-led ACOs also reported different priorities and challenges than ACOs led by integrated systems or hospitals.

“Most ACOs focus on care delivery changes and cost reduction initiatives that will not negatively impact their own clinical service revenue,” the survey authors wrote.

For example, most physician-led ACOs reported that they prioritize reducing avoidable emergency department (ED) services and inpatient admissions (81 percent) and readmissions (65 percent).

In contrast, only 57 percent of ACOs led by integrated systems or hospitals prioritize reducing ED services or inpatient admissions, while 50 percent aim to reduce downstream expenditures such as post-acute care.

That deviation in priority, according to survey authors, was “presumably because reducing ED and inpatient utilization in integrated system/hospital-led ACOs would cause the ACO to forgo more revenue than any shared savings they might earn through successful ACO performance. It’s these inherent differences in organizational structure that change the incentives for different ACOs and result in ACOs taking divergent paths towards achieving the triple aim.”

Regulatory Changes Sought

The latest ACO data came as the National Association of ACOs and seven other provider advocacy organizations pressed CMS to increase transparency and predictability for ACOs and other types of alternative payment models (APMs).

In a March 26 letter, the organizations sought changes that included:

• Adopting a public process for the development of new APMs
• Implementing model changes in a “clear and public manner”
• Refraining from making midyear changes, which have a significant programmatic or financial impact on model participants

“We believe that public communication of model design elements and eliminating mandatory midyear changes would improve providers’ ability to evaluate and compare options while still allowing the [Center for Medicare and Medicaid Innovation] to be nimble and flexible, consistent with its mission,” the letter wrote. “Affording stakeholders an opportunity to provide feedback will strengthen the model portfolio over the long term and create stability and predictability that supports moving away from fee-for-service and fosters the movement to higher levels of risk and reward.”