Number of ACOs grows, but sustained growth requires reduced administrative burden

The number of accountable care organizations is growing, according to a new report.

The number of accountable care organizations is growing, but sustained growth will depend on how well ACOs can be aligned with other new payment models and how effectively the administrative burden on providers can be reduced.

Since the first quarter of 2016, 138 new ACOs formed, while 46 dropped their contracts, representing an 11% growth, according to an analysis from Leavitt Partners and published in Health Affairs. ACOs cover more than 32 million lives, a growth of 2.2 million in the past year and accounting for 10% of the U.S. population.

Fewer providers participate in ACOs than in other types of advanced payment models, according to the report, but the majority of money paid through these models flows through accountable care.

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Studies have shown that effective ACOs can reduce readmissions, spending and hospitalizations. The jury is still out with some physicians as to whether the model truly works, as some studies have shown significant doctor turnover and enrollee churn.

To ensure future growth, more evidence is needed to indicate what types of providers benefit most from the ACO model, as few ACOs have actually combined quality improvements with significant spending reductions, according to the analysis.

“To achieve better value across the American health care system, more progress is needed to refine and align alternative payment models, and to help all types of health care providers develop the capabilities needed to succeed in them,” according to the report.

It must also be easier to balance multiple advanced payment models at one time. For instance, bundled payments and ACOs can work in tandem, but the administrative burden can be too high to apply multiple payment models to the same patient.

Providers must ensure that they have aligned, non-competing interests to reduce the burden on physicians.

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Providers also should experiment with new payment models, as they will not be able to succeed in them if they don’t have adequate knowledge in how alternative payment models work and what most benefits their organizations.

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The future of alternative payment models is in question under the Trump administration.

Department of Health and Human Services Secretary Tom Price has said the administration won't dictate payment reforms to providers, and has previously said that bundled payments overstep the Centers for Medicare & Medicaid Services' bounds.

CMS has delayed the expansion of current bundled payments and addition of new programs until 2018.