Why ACOs fail

A new study examining why Medicare ACOs succeed or fail suggests that recent rule changes could negatively affect the success rate of the value-based care model.

The study, published in May in Health Affairs, examined why ACOs departed Medicare’s Shared Savings Program (MSSP), and found that organizations that received bonus payments-even just one-were far more likely to remain in the program.

“The most important programmatic factor for ACO survival appears to be an ACO’s ability to realize bonus payments,” wrote the authors. “Even achieving a bonus just once cut the risk of program exit by more than three-quarters.”

Meanwhile, ACOs that had to absorb “downside risk”-in other words, facing financial penalties for not hitting quality care benchmarks-were more likely to fail. Of the ACOs that participated in the MSSP at some point during the first five years, about 30 percent decided to exit the program, the study notes.

The study examined the status of more than 600 ACOs in the MSSP between 2013 and 2017 to determine the reasons why ACOs failed and why they succeeded. According to the study, the top reasons why an ACO survived were:

• Achieving a bonus payment
• Having a higher benchmark, per capita
• Being in a market with higher Medicare cost growth
• Offering a wider array of care coordination services

The main reasons ACOs failed were:

• Having downside risk, which means facing financial penalties
• Treating a sicker patient population

As a result, the authors conclude that a new federal rule intended to speed up the timeline for ACOs to accept financial risk could cause more ACOs to fail and leave the program. Under the new rule, ACOs would only have one to three years before moving into downside risk, instead of the current six years.

“This raises the concern that the new MSSP rule … could cause successful ACOs to drop out of the program,” the authors write.

The ACO model is designed with the ultimate goal of both reducing healthcare spending and increase quality care. Studies suggest that the ACO model, compared to non-ACOs, has been credited with reductions in post-acute care and skilled nursing facility stays, reduced hospital readmissions and improved patient experience and satisfaction.

READ MORE: The state of accountable care organizations