Although the consensus is that accountable care organizations (ACOs)—in general, and specifically those participating in Medicare programs—have thus far been more successful at improvements in quality and patient satisfaction than at achieving cost savings goals, the number of new ACOs continues to increase, as do physician participation in and patients receiving care from ACOs. 

Management consulting firm Oliver Wyman estimates that 585 ACOs are now operating in the U.S., up 12 percent from 2014 and 127 percent from 2013. Of that total, 426 are participating in Medicare’s Shared Savings Program (MSSP), Pioneer ACO Program or PGP Transition Demonstration (up from 368 in 2014 and 134 in 2013). Those 426 ACOs are providing care to approximately 5.6 million patients, or about 11 percent of all Medicare beneficiaries, an increase from roughly 5.3 million patients in 2014, or about 10 percent of Medicare beneficiaries. The firm pointed out that while the increase in Medicare ACOs was approximately 16 percent, the increase in the number of patients was only about 6 percent; thus, many of the new ACOs are smaller than those joining the Medicare programs in previous years. 

Most of those same 426 ACOs provide care to non-Medicare patients as well—an estimated 35 million, according to Oliver Wyman, or about 2 million more than in 2014 and roughly 20 million more than in 2013. 

The remaining ACOs—159 of them, by Oliver Wyman’s count—are commercial organizations that are not participating in the Medicare programs. The firm noted that it is difficult to estimate the number of these ACOs because there is neither an official listing of ACOs nor an official description of what constitutes an ACO. In fact, according to a recent Health Affairs blog posted by David Muhlestein, Leavitt Partners, a management consulting firm founded by former HHS Secretary Mike Leavitt, places the overall ACO count at 744, not 585. Leavitt Partners’ total is derived from a database of publicly available information and interviews.

The 159 non-Medicare ACOs that Oliver Wyman identified provide care to between 9 million and 15 million individuals, which is about the same number as in the previous year and up only slightly from 2013. Altogether, the firm noted, 69 percent of the U.S. population lives in a primary care service area served by an ACO, and 44 percent lives in an area served by two or more ACOs. 

According to Leavitt Partners’ tallies, 23.5 million people are covered by ACOs, an increase of 4.5 million since the beginning of 2014. Of those 23.5 million individuals, only 7.8 million are patients of MSSP or Pioneer ACOs. Hence, “the majority of ACO volume is coming from the commercial and Medicaid sectors,” Muhlestein stated. 

Muhlestein also said more ACOs are expanding the number of contracts under which they operate, with 10 percent having three or more contracts, and commercial payers have “significantly” expanded their involvement in ACOs in the last few years. He noted that this year would be “pivotal as to whether the ACO model will move from a series of exploratory programs toward mainstream adoption,” citing the proposed changes in MSSP rules, the Next Generation ACO Model initiative, the expansion of Medicaid ACOs and the HHS’s goal of moving 50 percent of payments toward alternative models within the next three years as factors that could have a direct effect on “the overall trajectory of the movement.”

ACOs will cover 72 million people by early 2020 and more than 150 million in 2025, according to Muhlestein’s “best guess” predictions. 

Oliver Wyman’s Niyum Gandhi also seems to believe that this year could be a defining point for ACOs, stating that they “have reached an important point in their evolution.” He said enough ACOs now exist that “they will be able to capture market share very quickly once they start demonstrating superior value.”

He said the most effective ACOs are delivering care at 20 percent to 40 percent below the typical cost of care, with excellent quality and patient satisfaction. The majority of ACOs have not attained this level of results, though, in part because they are hampered by the current Centers for Medicare & Medicaid Services (CMS) rules. The inability to earn shared savings payments is keeping them from investing “as they’d like to,” Gandhi remarked, adding that the proposed rule changes and the Next Generation ACO model “may give the best ACOs the push they need to start competing more aggressively.”

Along with increases in the number of ACOs and patients cared for by ACOs, physician participation in ACOs is also on the rise. Medscape’s annual Physician Compensation Report shows that approximately 30 percent of the more than 19,500 physicians surveyed were participating in an ACO last year, up from 24 percent in 2013, 16 percent in 2012 and 3 percent in 2011. In last year’s survey, an additional 7 percent said they intended to join an ACO in 2015. Among the primary care physicians surveyed, 35 percent were participating in an ACO and another 8 percent indicated that they planned to join an ACO this year.  

Our Take: Oliver Wyman is right about two things for sure. Counting ACOs is a near-fruitless exercise. By our assessment, which in part comes from data publicly available through CMS, there are 459 Medicare ACOs—88 percent of which are MSSPs. That includes the Pioneers, MSSPs, Advance Payment and, for comparison, the PGP Transition Demonstration program. 

The word “ACO” has become a ubiquitous marketing term for the larger carriers, although to be fair, most have branded their own style of value-based contracting with something akin to, but not exactly, an accountable care organization. Cigna has its “Collaborative Accountable Care” initiative, Aetna operates its arrangements (sometimes) under “Aetna Whole Health” and so on. Humana claims to have more than 900 accountable care-like agreements in place, although it is unclear about the time horizon for such contracts. So, Oliver Wyman is correct in saying that it’s difficult to pin down exactly what constitutes an ACO.

We have summarized the data below in two tables. The first includes our detailed count from our own research, which includes individual and quantitative interviews, but does not include the Humana agreements. Ours is closer to Leavitt Partners’ estimate at 731 ACOs. Detail for Oliver Wyman and Leavitt Partners was unavailable.

The second table includes our population estimates, not including states with Medicaid ACOs. 

Readers should take note here of the futility of relying on such estimates. At this point, we believe the most important measurement when considering market penetration is the percentage of ACOs that have roots in integrated health systems, which is very high. Nearly all such systems are experimenting with ACOs, either Medicare-based or commercial-based, or both. Such IHS/ACO combinations provide the ability to contract, either directly, through a group purchasing organization or through a PBM. In these cases how the general covered population is managed spills over into the ACO, or vice versa. If Geisinger is managing patients through its PGP Transition Demonstration program, be assured that what’s learned from that effort is being implemented throughout the system. 

As the data continues to evolve in a more meaningful way, we’ll keep our readership informed.

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