ACOs Vs. MA Shows ‘Grab Them By The Wallet’ Central To Health Reform

Once upon a time, Accountable Care Organizations were going to be the knight in shining armor, rescuing U.S. health care by “simultaneously improving health, improving patient experience and reducing per capita costs,” as an NCQA definition put it.

That hope seems like a far-away fairy tale when reading the latest ACO report from the Centers for Medicare & Medicaid Services. While ACOs, designed to give providers control over care, serve 11 million beneficiaries in their most popular form, their ranks have shrunk about 20 percent since their 2018 peak. By comparison, enrollment in health insurer-run Medicare Advantage plans has surged to 31 million members, or over half of all beneficiaries.

But the more important numbers may be that just under two-thirds of ACOs (63 percent) earned performance payments, and they tended to be smaller and with lower revenue. Meanwhile, Medicare managed care plans are paid a generous 104 percent of traditional Medicare fee-for-service costs. No wonder ACO enthusiasm has eroded, while insurance giants and start-ups alike have jumped into MA with both feet.

The good news for ACOs is that they provided their enrollees higher-quality care at a lower cost per person than similar groups of doctors and hospitals provide for non-ACO patients. That saved taxpayers money, though not a lot ($1.8 billion) in the context of Medicare’s mega-budget. Meanwhile, a Kaiser Family Foundation analysis of 62 studies of MA found no overall difference in quality between MA and traditional Medicare FFS, although there were some differences by condition.

The issue of MA cost remains controversial. MA critics accuse the plans of gaming the system to reap undeserved revenues. MA supporters not only deny those charges, but say the latest Medicare Commission trust fund report “proves that Medicare Advantage is saving Medicare.”

There doesn’t seem to be good data on an MA versus ACO match-up; each side has its strengths, this 2018 study concludes. Still, MedPAC is counseling Congress to reexamine MA payment and benefits that could be too generous. Separately, a group of legislators recently introduced the Value in Health Care Act of 2023, which aims to increase ACO participation by making it easier for providers to become profitable.

On the other hand, when CMS rules on a new ACO REACH program to improve health equity attracted investor interest from private equity, progressives complained, and the agency had to reassure them it was not going over to the Dark Side.

Back in 2010, after passage of the Affordable Care Act mandated establishment of ACOs, my friend and colleague Patricia Salber described the optimism pervading an ACO conference this way: “The ACO movement holds out the promise that we will, at last, change the way health care is organized and paid for.” I wrote much the same thing in 2012 for KFF Health News when the first ACOs began operating.

While I noted that ACO profitability remained an important issue, Salber zeroed in on the entrenched power of the status quo in The Doctor Weighs In blog. She wrote: “As everyone at the conference acknowledged, transforming our volume-driven system to one that is patient-centric, quality oriented, and relationship-based is going to be really heavy lifting.”’

Heavy lifting, indeed. While some ACOs are certainly fulfilling the ACO movement’s promise in innovative and exciting ways, others seem to be just filling space, as some large health systems dabble in value-based care just in case the FFS gravy train finally derails.

Of course, it doesn’t help the public perception that “accountable care” sounds like medical care by a CPA, while “Medicare Advantage” seems like a VIP upgrade. Moreover, CMS regulations restrict what ACOs can say when notifying beneficiaries that they’ve been enrolled in an ACO, but can unenroll. This absence of positive choice and the legal language of the notice are roughly as attractive as the privacy policy of the average website.

In the August issue of Health Affairs, veteran policy entrepreneur Alain Enthoven reviews Modernizing Medicare, a collection of essays on possible ways to use consumer choice and market competition to fix the Medicare program. The book, he says, is a “must read” but not an easy read “because of the great complexity of the Medicare program.”

Allow me to simplify health reform in America: Grab them by the wallet, and their hearts and minds will follow.