The ACO plateau
Add Axios as your preferred source to
see more of our stories on Google.
The number of Medicare accountable care organizations — groups of hospitals and doctors who care for specific groups of Medicare patients — has flat-lined since 2018, new data from the federal government shows.
Why it matters: The Affordable Care Act created ACOs with the intent of both improving quality of care for patients and cutting costs, and then sharing savings with those care providers.
- But industry interest stagnated after Medicare cracked down on models that made it too easy for providers to collect money.
Between the lines: 41% of all Medicare ACOs are still in what's called "one-sided" models (and that number used to be higher than 80%).
- "One-sided" means hospitals and doctors collect money if they keep spending on patient care below a certain cost target and hit high-quality scores. But they don't have to pay anything to the federal government if spending is above that cost threshold — in other words, there's no risk of having to pay a penalty and all the reward of possible bonuses.
- "Two-sided" models are where providers can still get savings, but they also are on the hook to pay back money that goes past their cost target.
- Hospitals and doctors love one-sided ACOs because they are "a license to pick up dollar bills off the sidewalk," consultants at Gist Healthcare said in 2018.
The big picture: ACOs have scored well on quality and saved some money, but those savings are minuscule — just 0.5% of Medicare's "fee-for-service" spending.
- And with easier ACO models now scaled back, some hospitals prefer to run their own lucrative Medicare Advantage insurance plan.
