ACO Update: A Slower Pace of Growth

Despite well-publicized departures from Medicare’s Pioneer ACO Program, the number of accountable care organizations (ACOs) continued to rise last year, though at a slower pace than in 2013. Almost 70 percent of the U.S. population now lives in localities served by ACOs, and 44 percent live in areas served by two or more.

The total number of ACOs participating in Medicare programs has increased to 426, up from 368 in January 2014 and 134 in January 2013. Oliver Wyman has identified an additional 159 ACOs, bringing the estimated total to 585, up from 520 in January 2014, and 260 in January 2013.

Accountable Care Within Reach: Access to ACOs by State, January 2015

Access to ACOs differs considerably by state—and within states—but in our most recent analysis, a majority of the population in more than half of the U.S. could receive their care from an ACO.

1How do you interpret the latest ACO figures?

The slowdown we’re seeing in the growth of ACOs was almost inevitable, given the pace of change of the past two years. I expect the next advance will be characterized more by increased sophistication than by increased numbers. A handful of the best ACOs are likely to find themselves with the data to prove that they really do deliver superior, lower-cost care—and will have the capital to invest in expansion. Traditional healthcare doesn’t provide very good value. It’ll be interesting to see what happens when patients have a compelling alternative.
2Isn’t this taking longer than it was supposed to?

Not really. People often fail to understand that payment reform only takes you so far. There are organizations out there that are trying to hit their cost reduction targets entirely by shifting sites of service or limiting expensive diagnostics. While that is important in the short run, in the long run, you need more. You need care models designed to meet the needs of specific patient populations—diabetics, frail elders, patients with multiple chronic diseases—and it takes time and money to build them.
3Medicare has announced that it wants to change the rules for ACOs. How does that fit in?

CMS has been learning along the way, much as the ACOs themselves have been. Many people—including the most effective ACOs—believe CMS erred too much on the side of rewarding improvement rather than efficiency, while simultaneously structuring the program in a way that made knowing your improvement target difficult. The new rules make the program more sustainable and add some balance so strong ACOs have a better chance at realizing shared savings.