Accountable Care Has the Potential to Improve Care and Reduce Costs, Say Leaders with Early Experience

United Hospital Fund Report Also Finds Design Elements of Medicare’s Program that Hamper Success

Release Date: 04.08.2015
Contact: rdeluna@uhfnyc.org
Contact Phone: 212-494-0733

Two new United Hospital Fund reports examine the early experience of New York’s Medicare accountable care organizations—including the savings achieved and quality measures met by most—pointing to them as “potentially transformative innovations.” Leaders with early experience guiding these accountable care organizations agree that accountable care has the potential to improve care and reduce costs.  The leaders also noted that accountable care requires substantial investments and that elements in the Medicare accountable care programs’ design hamper their ability to succeed.

The reports focus on the 27 organizations in New York participating in Medicare’s Pioneer ACO Program or in the Medicare Shared Savings Program, a number that has grown from 16 in early 2013. The reports’ authors interviewed leaders of 17 of these organizations for their insights on their experience to date.

“After speaking with these leaders, one thing is eminently clear: Transitioning to an accountable care model is hard stuff,” said Gregory Burke, the Fund’s director of innovation strategies, and an author of the reports. “But these organizations appear committed to continuing on this path, largely because it’s also clear that public policy is moving toward new value-based purchasing models, of which Medicare’s Shared Savings Program is among the best-known examples.”

The leaders all pointed to the substantial investments that are needed, including to hire new staff, implement new systems, absorb the costs of staff training and workflow redesign, and develop or acquire new capacities for network management, network-wide quality improvement processes, and clinical and claims data analytics and reporting. They also identified elements in the Medicare accountable care programs’ design that may hamper success, including rules guiding how patients are assigned to an accountable care organization, how accountable care performance is measured, and how organizations can effectively engage patients in their own care.  

The qualitative report, Accountable Care in New York State: Emerging Themes and Issues, examines differences in the sponsorship of New York’s accountable care organizations, noting that group practices and hospital systems appear to be more advantageously positioned for accountable care than less formally organized physician networks and physician-hospital partnerships, in part because they are more likely to have unified leadership, well-developed infrastructure (including the same electronic medical record systems), and common culture.

The report also examines how the goal of achieving savings—largely through reducing preventable emergency department visits, hospital admissions, and readmissions—has different implications for accountable organizations led by physicians or by hospitals. For the physician-led organizations, these reductions affect someone else’s income, whereas for hospital-led organizations, the reductions affect their own income, creating a conflict. Nevertheless, the leaders of the hospital-led organizations see the need to evolve to a different clinical and financial model, in which they are able to participate in shared savings and potentially more robust forms of value-based purchasing.

The quantitative report, New York’s Medicare ACOs: Participants and Performance, examines the growth of accountable care across the state and explores regional variation. Among the findings, in New York City, the majority of participating Medicare beneficiaries are attributed to organizations led by hospital systems and physician networks, whereas upstate, most are attributed to organizations led by physician-hospital partnerships. In contrast, downstate accountable care organizations outside New York City are all led by group practices or physician networks.

“These reports focus on actual accountable care experience in Medicare to inform an understanding of the issues that will emerge as Medicaid and other insurers advance new organizational and payment changes in New York,” said Jim Tallon, president of the Fund. “They tell an important current story and inform the road ahead.”

Currently, 20 percent of Medicare fee-for-service beneficiaries in New York State (427,000 of 2.1 million) are participating in a Medicare accountable care program. The substantial expansion of New York’s Medicare accountable care organizations over the last three years foretells continued expansion.

The quantitative report summarizes the financial results for the first performance year of New York’s 16 earliest accountable care organizations. (It is too early for expenditure results on the other 11.) Of the 15 organizations participating in Medicare’s Shared Savings Program, eight saved a total of $78 million against their respective benchmarks, while seven generated losses totaling $49.5 million. In addition, Montefiore Medical Center, New York’s only participant in the Pioneer ACO Program, saved nearly $25 million—the highest reported shared savings total of any Pioneer ACO in the country. Savings are shared between the Centers for Medicare and Medicaid Services and qualifying accountable care organizations.

The reports, Accountable Care in New York State: Emerging Themes and Issues and New York’s Medicare ACOs: Participants and Performance, were written by Mr. Burke and Suzanne Brundage, health policy analyst. Both are available from the Fund’s website, www.uhfnyc.org.

Primary support for this work was provided by the New York State Health Foundation.

About the United Hospital Fund: The United Hospital Fund is a health services research and philanthropic organization whose primary mission is to shape positive change in health care for the people of New York.

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