Yesterday, I told you about accountable care organizations (ACO) and how they might affect your physical therapy practice. Just one of several alternative payment models, the ACO approach seems to foster better and more expedient care, lower costs, and greater emphasis on physical therapists’ role as care coordinators. But CMS has experienced high dropout rates with its Pioneer program, and Medicare has already gone through three iterations of its ACO model, including the recent release of the Next Generation ACO Model. This volatility might cause folks to question the efficacy of the ACO program: ultimately, do ACOs really do what they’re meant to do?

For many ACO advocates—including Medicare ACO early adopters—the answer appears to be a resounding “yes.”

Colorado’s statewide ACO, called the Accountable Care Collaborative (ACC), is the longest-running Medicare ACO to date. Not only has it grown from 50,000 members to 600,000 since its inception in 2011, but also it has produced promising key performance indicator results that suggest Colorado’s approach is indeed improving healthcare experiences and outcomes for ACC beneficiaries. Moreover, according to its 2014 annual report, the ACC “achieved gross savings in medical costs between $98 million and $102 million with net savings totaling $29 million to $33 million after administrative expenses,” including infrastructure investments and incentive payments. Not too shabby, eh?

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The ACC’s success is no accident. Susan E. Birch, the executive director for the Department of Health Care Policy and Financing, notes that the ACC relies on a “solid foundation that has been carefully and deliberately laid over the last three years.” Those involved make it a point to learn from what doesn’t work and build on what does to make the program better. Next up, the ACC plans to “move toward greater integration of physical and behavioral health, more sophistication in using health information technology and health data, and further progress in paying for value.“

While Colorado might be the poster child for ACO early adopter success, it’s not alone in achieving positive results. Aetna, the nation’s third largest insurer, developed a model called the Lasting Economic Advancement Plan (LEAP), which creates an environment in which hospitals can start driving revenue through primary care, preventive services, and chronic condition management. So far, the approach seems to work quite nicely for both Aetna and its partners. Last year, Aetna and Arizona-based Banner Health Network’s own accountable care collaboration netted around $5 million in Medicare shared savings and “a 5 percent reduction in average medical costs for group and individuals members in Aetna’s fully-insured Whole Health plan”.

While Medicare’s ACO program might have had a rocky start, it too has proven successful over a longer time period. For a recent study published in the New England Journal of Medicine, researchers performed a difference-in-differences analysis of Medicare fee-for-service claims submitted during the Pioneer program’s first year. They compared Medicare spending for Pioneer ACO beneficiaries with a control group made up of other beneficiaries. According to their analysis, the Pioneer ACO program saw “modest reductions in Medicare spending of 1.2%,” or about $118 million, resulting in a net savings of $42 million in its first year alone. After two years, the Pioneer ACO program—which serves more than 600,000 Medicare beneficiaries—saved more than $384 million, and quality scores improved. So, despite early participant losses, CMS now plans to expand the program.


Current ACOs—like the ones I mentioned in this post—are breaking new ground in the value-based reimbursement landscape. If their experiences are any indicator, this program is a work in progress and, as the conversation around payment reform evolves, the ACO structure likely will, too. But while strategies and models may change, as long as providers remain focused on learning from their mistakes and building upon their successes, ACOs can achieve their purpose.

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