ACOs, already surging, poised for even more growth

The number of accountable care organizations has increased significantly in recent years and is expected to grow even more quickly in the immediate future, with physician practices under increasing demand to lead or participate in them.

“There’s going to be a big growth spurt in 2013,” said Richard Weil, PhD, a partner with Oliver Wyman, a New York-based company that consults with health care institutions looking to set up ACOs. “The folks who were hoping that the ACO would go away are not going to get what they want.”

Some 25 million to 31 million patients are affected by this model in some way, according to a report issued Nov. 26 by Oliver Wyman. A total of 2.4 million Medicare patients receive care through ACOs recognized by the Centers for Medicare & Medicaid Services. Fifteen million non-Medicare patients get services from practices with CMS ACO status, and 8 million to 14 million patients are in ACOs run by commercial insurers. Leavitt Partners, a consultancy working in this area, counted 328 ACOs as of Nov. 1. This is a significant increase from 221 noted at the end of May, and 164 counted in September 2011.

“There’s a lot of enthusiasm about the movement, and there’s significant activity going on,” said Andrew Croshaw, a partner and managing director of Leavitt’s health care practice.

Within an ACO, physicians generally receive fees for services provided and a share of any money saved if they meet quality metrics. Medical industry experts say the fee-for-service aspect most likely will become smaller, while the quality payments will grow. This means physicians, whether in small or large groups, need to find ways to connect with other parts of the health system to coordinate care.

“Find the best partners who are willing to optimize care, and the more you can educate yourself on the ACO principles and what’s going to be measured, the better,” said Michael Englehart, president of Advocate Physician Partners, which handles the contracting for Advocate Health Care of Oak Brook, Ill., and 4,000 affiliated employed and independent physicians. The organization has accountable care organization arrangements with Medicare and Blue Cross Blue Shield of Illinois.

Hundreds of ACO approvals coming

The number of ACOs is expected to go up fast in 2013 because the most notable growth spurts in this model occur when CMS approves a new batch of Medicare program participants. CMS recognized 32 pioneer ACOs in December 2011, and an additional 27 were designated as first-round Medicare Shared Savings ACO participants in April. Eighty-nine organizations received this label in the second round in July.

About 500 have applied for recognition in the third round, which will be announced in January 2013. Consultants believe that at least 40%, or more than 200, will receive it. Commercial insurers also are announcing new ACO program participants on a regular basis and plan to expand these initiatives so even the smallest practices can take part.

“This is becoming a more pervasive phenomenon,” said Norman Chenven, MD, founder and CEO of Austin Regional Clinic, a 320-physician multispecialty practice in Austin, Texas. “And that’s really good for us. The more you can scale it and the more it applies to every patient that we see, the better.” Austin Regional Clinic is part of the Seton Health Alliance, a pioneer Medicare ACO. It also works directly with several commercial insurers to set up ACO programs for their members.

The American Medical Association’s ACO principles state that these entities should be led by physicians. It turns out that growth has been most significant in areas of the country with long histories of strong physician organizations, such as large medical groups and independent practice associations, analysts say. For example, the Oliver Wyman report found penetration greatest in states such as California, which has a significant history of independent practice associations, and Massachusetts, which tends to have larger medical groups. Research from Leavitt Partners found 38 ACOs led by physician groups in its September 2011 survey, but this number jumped to 70 in May and 133 by the beginning of November.

“Large physician groups, especially those with a large primary care component, are well-positioned to capitalize on the ACO,” Weil said. “For health systems and hospitals, ACOs are economically negative. That’s not the case for physician entities. It can be economically positive for them.”

However, experts say physicians who lack experience working in a value-based payment model still have plenty of time to get involved. Actually, waiting can be advantageous. First movers may set the stage, but those who come in afterward may learn from their mistakes.

“There can be a first mover advantage,” Croshaw said. “But second movers can be more successful.”