Over the past eight years, the US health care system has seen the widespread implementation of Accountable Care Organizations (ACOs) as a way to move from volume to value.
What are ACOs?
ACOs are groups of providers that are collectively accountable for the cost and quality of care for a defined patient population. Examples include the federal Medicare Pioneer ACO program, state-level Medicaid ACO programs, and commercial ACOs.
The design of these care models differs. A key feature is the shift of financial risk to providers, where providers can “share savings” that result from the ACO if they meet quality targets. This is known as “upside risk.” In some ACOs, providers are also at risk of losing money if they do not meet savings or quality benchmarks, “downside risk.” Research shows that ACO implementation has reduced avoidable utilization, improved quality some, and nominally reduced costs. Yet, evidence has been mostly mixed.
ACOs are rapidly expanding, but implementation evidence is not robust
The short-term effects of implementation factors on ACOs are often unclear. Generally, we can only observe unintended consequences after programs are implemented. Much of this is because the organizations are complex, and implementation differs both across and within models. While understanding ACO implementation is critical to unpacking differences in “success,” implementation processes of ACOs are understudied. Studying implementation processes can help illuminate this black box. In this post, we searched the PubMed database from 2013 to 2018 to better understand implementation determinants and strategies.
We identified fifty studies examining factors related to implementing ACOs such as crucial program design elements, financial incentives, implementation processes, organizational and provider characteristics, and external environmental characteristics. We found that ACO implementation processes are heterogeneous. Using these studies, we identify some valuable lessons to improve ACO design, processes, and make suggestions for future research. The findings outlined below focus on implementation. We have categorized the ideas into three key areas: quality indicators and targets, partnerships and engagement, and characteristics and implementation factors of successful ACOs.
Quality indicators and targets
ACOs often tie contractual quality indicators and targets to financial incentives. Financial incentives are central to the operation and evaluation of ACOs. The literature showed the importance of clarity, relevance, and communication of the indicators and targets. Organizations often choose achievable goals. They also often prioritize goals across multiple contracts and may ignore goals that do not have incentives. Clinicians largely ignored measures that were not targeted, mainly when they believed that the quality indicators were hard to achieve.
Monitoring and evaluation
Studies suggest that timely program evaluations and ongoing performance should accompany the monitoring process. Authors often assessed the essential elements of performance monitoring and evaluation processes. Findings from the literature also indicate that ACOs should change their targets based on their specific evaluations. However, the ability of ACOs to respond to continuous feedback and remain flexible in the execution of change remains understudied. The use of clinical data with a quick turnaround time can overwhelm providers. Thus, ACOs and providers need to build capacity to measure, report, and analyze quality indicators promptly. Balancing both standardization and flexibility in quality metrics is challenging.
Reset benchmarks
The literature further suggests that provider incentives for ACOs may be poorly designed. Incentives are designed to reward providers based on process measures and rarely outcome measures. Spending benchmarks that are out of reach for some ACOs may decrease motivation, or cause some to leave the program altogether. When incentives are set with more realistic performance targets, such benchmarks may change physicians’ behavior. National data suggest that provider compensation within ACOs that is tied to quality may not be strong enough to change provider behavior for hospitals. Insufficient financial incentives tied to ACOs may deter hospitals from investing in the resources needed to achieve the quality target. Additionally, although a target to reduce spending, most emergency departments have no financial incentives tied to quality outcome indicators.
Collectively, these findings suggest that there is a need to realign the implementation efforts of ACOs and ACO quality targets to maximize the ability of ACOs to improve the quality of care.
Partnerships and engagement
Good relationships with providers and other stakeholders are vital for the success of ACOs. One study suggests that ACO success largely depends on successful partnerships with independent health care organizations, which form out of existing and positive relationships. Partnerships also extend to contracted expertise, where providers can contract out for financing, data management, or case management of complex patients. For example, hiring management partners play a crucial role in some ACOs’ operations.
Provider engagement is also vital to ACO initiation and success. One challenge was the engagement of specialty providers because ACOs rarely specified their role and their risks or incentives at the beginning of implementation. One study of emergency physicians in Massachusetts reported that most emergency physicians were not familiar with ACO goals. Lack of awareness can limit the ability of these physicians to affect change within the ACO. Physicians in Medicare ACOs hold diverse views concerning their role in improving health care quality and containing costs. ACOs faced challenges in trying to engage physicians in their models, as physicians’ perceptions of ACOs were often not aligned with ACO goals.
Characteristics and implementation factors of successful ACOs
We can define successful ACOs as providers, hospitals, and organizations that have lowered growth in health care expenditures while improving or maintaining the quality of care for their patients. Several providers-, hospital-, and ACO-level factors have been shown to contribute to overall ACO success using this criterion. Some of these were covered in another blog back in 2016. New evidence has brought new answers. For example, experienced physician groups and those that provide cost-effective care before ACO implementation were more likely to form successful ACOs. Likewise, hospitals that took part in multiple value-based payment and delivery reform programs were more likely to observe reductions in readmissions.
One study found that historically high-spending ACOs (i.e., risk-adjusted per beneficiary spending is above local averages) were more likely to generate savings than low-spending ACOs. However, high-spending ACOs were also more likely to report a lower quality of care. Factors related to better performance on quality measures include; screenings and disease prevention, having a large portion of Medicare ACO beneficiaries per primary care provider, having fewer specialists, having greater electronic health record capabilities, and having a hospital in the ACO network.
Additional literature has found commercial ACOs to be larger and more efficient compared to Medicare ACOs, to some extent. For diabetic care, the contracting partner influenced the performance of the ACOs. Partnering with a private payer was associated with higher quality while partnering with hospitals or community health centers was negatively associated with performance. Lack of available behavioral health care providers is a major barrier to implementing ACOs and coordinating care for patients.
We need more implementation research
ACOs continue to evolve. Many studies reflect the importance of understanding the implementation of ACOs. Therefore, future research needs to focus on studying specific implementation processes within ACOs. Research that identifies processes associated with ACO success, as reflected by sustained cost savings and quality improvement would be helpful. Specific ACO incentive structures are often considered proprietary, but researchers should bring more implementation science into ACO operation and evaluation. Increasing engagement with critical stakeholders, such as physicians and health system leadership, can help. Dissemination of information such as implementation strategies within successful ACOs can guide future practice and inform organizational ACO strategies.
Sugy Choi