ACOs as a cost-cutting measure? Not so fast...
A recent study of ACO financial performance found that they either broke even or lost money.
A new review of financial performance data for all four accountable care organizations (ACO) overseen by the Centers for Medicare and Medicaid Services (CMS) suggests that ACOs don’t achieve what they were created to do: lower health care costs.
James Kahn of the Philip R. Lee Institute for Health Policy Studies at the University of California San Francisco, and Kip Sullivan, a member of the advisory board for Health Care for All Minnesota in Minneapolis, evaluated the net CMS cost in each ACO program from 2005 to 2018.
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“We found that overall, ACO programs roughly broke even from the CMS perspective,” they wrote in an article published in August in the Journal of General Internal Medicine. “That is, when bonuses CMS paid to ACOs are subtracted from gross savings, the programs lost money or saved no more than few tenths of a percent.”
Kahn and Sullivan added that most reports on ACO financial performance focus on gross savings while omitting net savings and costs. “Some reports present only absolute dollars, without percentages, creating a misimpression of large effects,” they wrote. “Some include only ACOs that saved money, excluding those that did not, and some reports omit ACOs that dropped out.”
The end of ACOs?
Given their findings, the pair suggested that “it is time to draw the ACO experiment to a close” — an opinion they elaborated on in a piece posted on statnews.com: “ACOs are supposed to work best for a population living with many chronic illnesses, such as Medicare enrollees. If these programs can’t cut Medicare costs, they clearly can’t cut costs for the whole country.”
Kahn and Sullivan added that “the key assumption underlying the nation’s managed care experiment is that U.S. health care costs are high because Americans get too many medical services, and this overuse is caused by the fee-for-service method of paying doctors. … But the assumption that overuse is widespread, and that all overuse is caused by doctors caving in to fee-for-service incentives, is wrong. Over the last two decades, research has clearly demonstrated that overuse of medical care isn’t why health care costs are rising. Per capita health care costs in the U.S. are high compared with other nations because the prices at which medical services and drugs are sold is excessive.”
They concluded that “we should rely instead on lessons learned from other countries that have adopted single-payer systems, price controls and universal coverage with uniform benefits.”
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