Physician groups fuel ACO growth spurt

They are leading three times the number of accountable care organizations than they were seven months previously.

By — Posted March 6, 2013

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Two reports find that accountable care organizations are present in regions encompassing more than half of all Americans, and that only one state does not have an ACO based there. The growth in ACOs is being driven by expansion of Medicare-contracted organizations and interest from physician groups.

A Feb. 18 report from New York-based Oliver Wyman said 52% of Americans live in areas served by at least one accountable care organization, and 28% live in areas served by at least two. The numbers come from the consulting firm’s analysis of data from the U.S. Dept. of Health and Human Services.

Between 37 million and 43 million patients have physicians in ACO arrangements with at least one payer, according to Oliver Wyman, up from an estimate of 25 million to 31 million the firm cited in a Nov. 26, 2012, report. In January, HHS announced its latest round of Medicare ACO approvals, pushing the number of organizations contracted with the plan from 154 to 259. Oliver Wyman estimates that 4 million Medicare patients are part of ACOs, up from 2.4 million in September 2012.

Including the Medicare ACOs, there are 428 ACOs in 49 states and the District of Columbia, according to a report by Salt Lake City-based Leavitt Partners, which posted its research Feb. 19 on the site of Health Affairs (link). Delaware is the only state that does not have an ACO, although Leavitt said some patients there are served by ACOs in bordering states, and it’s likely an ACO will establish itself soon.

Physician groups have been particularly active in forming ACOs, according to Leavitt. As of Jan. 31, physician groups led 202 ACOs, about triple the number they led seven months previously, in June 2012. With 60 new physician-led ACOs in January, doctor groups passed hospitals, which lead 189 ACOs, as the organizations mostly likely to head such efforts.

Growth has been spread throughout the country, Leavitt said, with only 64 out of 306 Medicare-designed hospital referral regions having no ACO. The company said growth tended to lag in rural areas, particularly in the South and Appalachia. Leavitt said Boston and Los Angeles had the most in the nation, with 19 ACOs each, but particularly strong growth has been reported in Orlando, Fla.; Phoenix; Baltimore/Washington; Indianapolis; Omaha, Neb.; Minneapolis; Columbus, Ohio; and Portland, Maine.

Doctor payment still a concern

What the reports didn’t detail is how physicians were paid under ACOs. The organizations are designed to reduce health care costs and improve outcomes by moving away from fee-for-service payments in favor of models that are supposed to improve care coordination and quality, such as mixing risk-based payments and bonuses. In many ACOs, at least initially, analysts said many doctors are starting off continuing to be paid under fee-for-service as the ACO works out its model, even if the ACO is in a risk-based contract with a payer.

“It’s hard to know precisely how many people served by ACOs are cared for under the true fee-for-value contract,” Rick Weil, a partner in Oliver Wyman’s Health and Life Sciences practice group, said in a statement. “Most ACOs are still mixed models, with some patients being served through ACO-style or capitated contracts and some through more traditional fee-for-service contracts. It can take several years to shift an entire population from one model to another. But that total number of patients served by these mixed organizations is still important.”

The history of ACOs has been so short that there has been no model established for the best way to figure out payments. Leavitt noted that in 2013, “many ACOs will complete their first year under a risk-based contract. Their early results will influence how payers, providers and policymakers experiment with future iterations of accountable care.”

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