The New Power of Accountable Care Organizations

The role of health insurance payers, healthcare services providers, and public health organizations in the migration from fee-for-service to value-based care in pursuit of Quadruple Aim optimization.

Analyst Perspective

The new power of ACOs is driven by the collaborative efforts of health insurance payers, healthcare services providers, and public health organizations in the pursuit of Quadruple Aim optimization.

In recent years, the healthcare industry has significantly shifted its approach to care delivery, moving away from the traditional fee-for-service model and toward value-based care. This transformation has been driven by the emergence of accountable care organizations (ACOs) and their ability to address the challenges associated with rising healthcare costs and suboptimal patient outcomes. The success of this transition is enabled by collaborative effort between health insurance payers, healthcare services providers, and public health organizations, each playing a vital role in achieving the goals of value-based care in the pursuit of Quadruple Aim optimization.

Neal Rosenblatt Principal Research Director Info-Tech Research Group

Executive Summary

Info-Tech Insight

The success of ACOs and the value-based care model ultimately depends on the active participation and commitment of all stakeholders involved, working toward a common goal of optimizing healthcare delivery and improving the wellbeing of individuals and communities.

The healthcare landscape is undergoing a significant transformation

ACOs have emerged as a powerful tool to drive this transition.

• ACOs are collaborative groups of clinicians, hospitals, and healthcare providers working to enhance the quality of patient care by coordinating care delivery.
• Unlike the traditional fee-for-service model, ACOs are structured to incentivize healthcare providers based on the value and quality of care they deliver, rather than the volume of services provided. This shift in payment methodology encourages ACOs to focus on delivering high-quality, cost-effective, and efficient care to their patients.
• One of the key features of ACOs is the integration of care across different healthcare settings. This seamless coordination among providers enables better care management and transitions for patients, resulting in improved patient experiences and outcomes.
• The establishment of ACOs was made possible through the Medicare Shared Savings Program, which was initiated as part of the Affordable Care Act of 2010. The program aims to foster value-based care delivery, enhance care coordination, and promote cost containment in the healthcare system.

How do ACOs work?

ACO providers are rewarded for working together on a patient’s treatment plan no matter where service is provided, including doctor’s offices, hospitals, and long-term care facilities. The goal of an ACO is to ensure a patient gets better care, especially if they have conditions such as heart disease, diabetes, or high blood pressure.

ACOs ensure coordinated care. As a result, communication improves between:

• Primary care doctors and specialists.
• Doctors, hospitals, and long-term care providers.
• Health care providers and local health and social services programs.

When an ACO successfully delivers high-quality care while spending healthcare dollars more wisely, it will share in the savings it achieves.

What are the benefits?

Better care and lower costs. By sharing information about a patient’s medical history and coordinating treatment, ACO providers can provide better care and control costs.

Coordinated care. ACO specialists collaborate to reduce duplication of tests when treating more than one chronic condition at a time. ACOs must have a specific plan to improve a patient’s health. A care coordinator such as a social worker or nurse may be assigned to provide the coordinated care needed.

Accountability by ACO medical providers. ACOs get paid more if they can show that a patient’s health is improving (e.g. an ACO must show that a team is working on a patient’s care. They must show that the patient is getting preventive services, like a flu shot or a colonoscopy). An ACO is evaluated on 33 quality measures.

Sources: WebMD; HealthCare.gov; “Program Statutes,” CMS.gov, 2023

Among payers, ACO adoption is on the rise

Across all payers, ACO participation has continued to grow.

Among the 1,010 active ACOs, the most prevalent configuration remains those led by physician groups. Of these ACOs, 413 (41%) are led by physician groups, 263 (26%) are led by hospitals, and 270 (27%) are jointly led by hospitals and physicians. There are 65 other ACOs for which leadership data is unavailable. This data illustrates the continued prominence of physician-led ACOs in the healthcare landscape.

Source: “Growth of Value-Based Care,” Health Affairs, 2022

The number of active ACO contracts continues to grow.

Out of 1,760 active ACO contracts, private sector arrangements remain the most prevalent payer type, comprising 995 contracts (57%) with commercial payers. Medicare contracts account for 625 contracts (36%), and Medicaid contracts make up 140 contracts (8%) of the total. This data highlights the predominance of private sector agreements in the ACO landscape.*

* This total does not include Global and Professional Direct Contracting (GPDC) participants, which represent an additional 99 Medicare contracts and nearly two million covered lives. The total exceeds 100 percent due to rounding.

Source: “Growth of Value-Based Care,” Health Affairs, 2022

Although ACO adoption among hospitals is increasing, the adoption rate varies by hospital type

Source: American Hospital Association, 2023

Most physicians now participate in an ACO

Public health organizations bring strategic strengths to the ACO healthcare delivery and payment model

Opportunities for enhanced collaboration between ACO providers and payers include:

• Public health can act as a convener of ACO partnerships.
  • Create a formal organization with business associate agreements
  • Coordinate between clinical providers and community partners
  • Create the infrastructure to address community needs
• Public health can provide analysis of population health data, surveillance, needs assessment, and outcome evaluation.
  • Use electronic records to share data across providers
  • Use data across services to identify high utilization
  • Identify areas with the highest need for health care/wellness visits
• Public health can be a direct service delivery partner by providing primary care services or wrap-around services such as care coordination.
  • Provide care coordination as a contractor to accountable care collaboratives (ACCs)
  • Coordinate across sole-purpose programs to improve efficiency
  • Public health as a primary care medical provider
  • Coordinate medical, behavioral, and social service needs

Info-Tech Insight

Public health has a unique opportunity to partner and collaborate with ACOs to jointly inform their future as healthcare delivery transforms from paying for patient encounters to paying for outcomes.