Amid mixed news for Medicare ACOs, experts fear model is 'unsustainable'

Experts disagree on the effectiveness of Medicare's accountable care organizations, especially amid yet another high-profile departure from the Pioneer ACO program--this time from Dartmouth-Hitchcock Health System.

The Pioneer and Shared Savings Programs generated more than $411 million in savings in 2014, but the success of the model means more than financial value, Richard Barasch, chairman and CEO of Universal American Corp., told Kaiser Health News.

"For these things to work, it has to be not just a value-based conversation but it also has to be about how the practice is actually managed, said Barasch, whose organization includes Collaborative Health System, which runs 25 Medicare Shared Savings ACOs. For example, Medicare ACOs provide incentives to encourage annual wellness visits for Medicare beneficiaries, but many doctors are unaccustomed to treating patients as customers to whom they should market their services.

However, while the process of full ACO functionality starts with primary care, ACOs must have the ability to deliver a full range of services to take on the necessary financial risk, especially in states such as Vermont, where there are fewer tertiary care providers and insurers, and all of them are part of OneCare, the statewide ACO, according to VTDigger.

Moreover, despite encouraging news on shared savings, Medicare ACOs' performance results have left much to be desired, according to Robert Murray, president of consulting firm Global Health Payment. The performance issues, Murray told KHN, come down to inherent design flaws: ACO formation requires substantial capital, but participating hospitals and specialists have no incentive to control costs under the traditional fee-for-service model, meaning they will turn a profit by generating more volume--the precise opposite of the ACO model's goals.

His concerns are echoed by Dartmouth-Hitchcock Health System, which confirmed it will exit the Pioneer ACO program after high quality scores but disappointing financial performance, Healthcare Finance News reported. While Dartmouth-Hitchcock's ACO hopes to join Medicare's Next Generation model next year, the Pioneer model may prove "unsustainable," according Robert A. Greene, executive vice president and chief population health management officer for the ACO.

To learn more:
- here's the KHN article
- check out the VTDigger column
- read the Healthcare Finance News article

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