ACOs won’t accept ‘two-sided risk’ of upcoming Medicare contracts

May 1, 2014

As more Medicare patients are being served by ACOs, and their numbers continue to grow, a recent survey by the National Association of ACOs says that many aren’t happy with the risk involved in upcoming Medicare contracts.

As more Medicare patients are being served by accountable care organizations (ACOs), and their numbers continue to grow, a recent survey by the National Association of ACOs says that many aren’t happy with the risk involved in upcoming Medicare contracts.

Almost half (46%) of ACOs say it is very unlikely that they will accept “two-sided risk” in the next Medicare Shared Savings Plan (MSSP) contract, according to survey results from the National Association of ACOs released at their national conference held in April. Only 33% of ACOs said it was somewhat or very likely that they would accept the MSSP contracts.

The initial MSSP contracts that ACOs signed in 2012 were three years long, and there was no risk for possible losses. However, the second round of contracts require that ACOs share losses with Medicare, called the “two-sided risk” model. Providers are continuing to struggle converting from fee-for-service to value-based models, says Chas Roades, chief research officer of The Advisory Board Company.

“Providers need to see a clear pathway for transitioning to risk and away from volume-based care before they can abandon their fee-for-service traditions. But more accountable, patient-centered care is the key to improving quality, reducing costs and building a care model that is financially sustainable over time,” Roades said.

The success of ACOs have yet to be widespread, though many healthcare providers are still starting or joining them. In January, the Centers for Medicaid and Medicare Services reported that only 29 of the 351 ACOs will split $128 million in bonuses from MSSP.

A recent report by the consulting firm Oliver Wyman estimates that 5.3 million Medicare beneficiaries, or about 10% of the program, receives healthcare from ACOs. That number has increased 32% since July 2013.

Medicare ACOs also serve about 33 million non-Medicare patients. Non-Medicare ACOs serve up to 16 million people, and account for about 154 of the 520 ACOs currently in the country, according to the study.

In total, up to 52 million people, or 17% of the population now being served by ACOs.

Because 67% of the population now has access to an ACO, Niyum Gandhi, a partner in Oliver Wyman’s Health & Life Sciences practice group, says their impact will continue to grow.

“ACOs need to be treated as a triggering mechanism for a revolution in American healthcare. Their reach is at least as important a factor to watch as their current enrollments,” Gandhi says.