All-Payer Spread Of ACOs And Value-Based Payment Models In 2021: The Crossroads And Future Of Value-Based Care


During the past year, the pandemic strained the entire health care system. Many health care providers experienced significant disruptions with reductions in use and lower revenue. Some providers were able to weather the crisis by relying on the organizational competencies they had built for value-based payment models. Providers in more advanced payment models had more financial resilience against the reductions in in-person volume.

Now that the pandemic is starting to wane, concerns about health care spending are returning. We are now at a point where the Medicare Trust Fund is closer than ever to exhaustion, while enrollment in Medicare and Medicaid has continued to grow. Prior to the pandemic, experts estimated that Medicare expenses would grow more than 7 percent in 2020. Value-based payment models continue to be viewed as mechanisms to address rising health costs.

With this as the backdrop, the value-based payment movement has entered a crossroads. The Medicare Shared Savings Program (MSSP) paused new accountable care organization (ACO) entrants for 2021, and the move to two-sided risk was delayed because of the pandemic. More recently, new leaders for the Centers for Medicare and Medicaid Services (CMS) and Center for Medicare and Medicaid Innovation (the Innovation Center) have expressed their strong commitment to value-based payment and care transformation—while delaying some of the most recent advanced payment reforms (for example, Geographic Direct Contracting, Primary Care First’s Seriously Ill Population, Kidney Care Choices). 

In this blog post, we show the current growth of ACOs across all payers as well as other emerging population-focused value-based payment arrangements. We highlight future growth potential and offer recommendations for program improvements, supports, and opportunities to further the growth of value-based care.

Growth And Dispersion Of ACOs

All data are derived from Milliman Torch Insight and include Medicare, Medicaid, and commercial ACOs. While all public contracts are included, due to the extreme variation in ACO and value-based contracts, this count may miss some commercial contracts. Exhibit 1 shows all-payer ACO growth through quarter 1 of 2021. After rapid growth in the number of ACOs and ACO-covered lives from 2010 to 2018, ACO growth has plateaued. The plateau, and slight declines, started with greater downside risk requirements in the MSSP (for example, Pathways to Success) and have continued during the COVID-19 pandemic. In addition, the early closure of the application period for the MSSP’s 2021 performance year seems to have contributed to a net decline in the number of ACOs in Q1 2021.

Exhibit 1: Number of ACOs and ACO-covered lives, 2010 to Q1 2021

Source: Authors’ analysis of Milliman Torch Insight data. Notes: Blue bars are covered lives. Orange line is number of ACOs.

Exhibit 2 shows the number of entrants starting ACO programs and those stopping ACO contracts from 2010 through 2020. ACO exits in the past two full years have outweighed entrants, a phenomenon not observed prior to 2019. Since 2010, a total of 1,278 organizations have held at least one ACO contract, but 340 (27 percent) have dropped out of participation in all known ACO contracts.

Exhibit 2: ACO entrants and exits for all payers, 2010 to 2020

Source: Authors’ analysis of Milliman Torch Insight data.

Exhibit 3 breaks down ACO contracts over time by payer, showing that the overall growth trend reflects differences in Medicare versus commercial and Medicaid ACOs. While the number of Medicare ACO contracts has plateaued, commercial and Medicaid ACO contracts have continued to increase steadily. The average number of contracts per ACO has increased slightly from 1.6 in Q1 2018 to almost 1.8 in Q1 2021. Medicare’s share of total ACO contracts has decreased from 41 percent in early 2018 to 34 percent in Q1 2021.

Exhibit 3: Number of ACO contracts by payer, 2010 to Q1 2021

Source: Authors’ analysis of Milliman Torch Insight data.

Exhibits 4 and 5 below show ACO penetration by lives and contracts at both the state and hospital referral region (HRR) levels. As in previous years, ACOs and ACO-covered lives continue to be concentrated in urban areas of the country, and many rural regions still do not have a significant ACO presence. However, there are exceptions to this rule, with some rural HRRs having high levels of ACO penetration. Penetration has also increased slightly in some geographic regions that historically had fewer ACOs (for example, the Deep South and the Northern Great Plains).

Exhibit 4: ACO lives and penetration by state, Q1 2021

Source: Authors’ analysis of Milliman Torch Insight data.

Exhibit 5: ACO lives and penetration by hospital referral region, Q1 2021

Source: Authors’ analysis of Milliman Torch Insight data.

Other Value-Based Payment Models

Whereas the ACO model has plateaued by early 2018, in terms of number of participating organizations, value-based payment activity may be moving to other models such as direct contracting and advanced primary care models. The Innovation Center’s Primary Care First demonstration is currently underway in 26 states and regions and has 827 distinct participants. This model builds on the experience of the Comprehensive Primary Care Plus (CPC+) model, which ends this year and has 2,625 participating organizations. Primary Care First involves a simpler prospective payment structure and aims to give primary care practices more up-front payments in conjunction with accountability for total spending or hospitalization rates. This overall spending accountability is similar to ACOs’ level of accountability.

According to the Torch Insight database, only 128 CPC+ participating organizations are also participating in ACOs of any kind. Some CPC+ participants may have parent organizations or related organizations with ACO experience, but it seems that primary care programs such as CPC+ (previously) and Primary Care First (now) are engaging different kinds of providers. It remains to be seen to what degree CPC+ organizations will migrate to Primary Care First.

The Innovation Center’s Direct Contracting Global and Professional demonstrations began in 2021, with a combined total of 53 participating direct contracting entities covering a range of providers. The Direct Contracting demonstrations feature a shift largely or fully away from fee-for-service payment and enable participation in advanced primary care and population health models by accountable non-provider organizations as well as provider organizations. New and potential entrants include private health plans and companies that specialize in supporting providers assuming risk, which could provide significant capital and technical assistance to providers who might not otherwise have a rapid path away from fee-for-service. Amidst some concerns about potential for increased spending and beneficiary impact, the Innovation Center paused new applicants for the Direct Contracting Global and Professional tracks for 2022, which will limit the number of accountable care options for the coming year. However, more employers are implementing direct contracting models.

Amidst calls for simplifying its array of payment reforms, it is possible that CMS will take steps to consolidate its advanced primary care and population health models as part of its strategy for advancing care transformation. On the other hand, alternatives to traditional ACOs may enable more physician practices to move faster away from fee-for-service.

After The Pandemic

The COVID-19 pandemic was challenging for all health care providers, especially early in the pandemic when providers were managing patients in a new public health emergency and also dealing with rapid declines in revenue from precipitous drops in in-person visits and procedures. The pandemic was especially hard for independent primary care providers, given that they are often organized in small practices with limited (or no) financial reserves, resulting in furloughs, layoffs, and even closures.

The delivery organizations that managed best tended to be in some type of value-based payment arrangement. These organizations had built up organizational competencies that they could redeploy during a public health emergency, such as having care coordinators help with contact tracing or having existing telehealth platforms that could be ramped up for greater virtual care when social distancing measures are in place. In addition, organizations operating under more advanced payment models—including shared savings but especially models divorced from fee-for-service, such as prospective payment and capitation—could leverage their financial flexibility to rapidly shift their care models to what their patients needed in the pandemic.

Coming out of the pandemic, the nation needs to help more provider organizations not only recover but be resilient. Primary care practices in particular likely still need support, which could occur through programs such as Blue Cross Blue Shield of North Carolina’s Accelerate to Value. That program offers immediate relief to primary care practices that make a longer-term commitment to joining the organization’s ACO model, with technical assistance for small practices. Similar models that address both short-term financial stability and longer-term reform could be useful for other payers as well.

Recommendations For CMS And The Innovation Center

The plateau in ACO growth likely has multiple causes. One reason may be an increase in other value-based payment options. In addition, the requirements for taking on greater downside risk in the MSSP led many ACOs to leave the program.

In addition, several recent policy and program changes (pausing new applicants for the Direct Contracting programs and for MSSP, reassessing the NextGen program) have meant that interested organizations may not have opportunities to join an ACO program, at a time when many organizations are assessing their options. Moreover, even though new secretary of Health and Human Services Javier Bacerra and the Innovation Center director Liz Fowler have emphasized their commitment to value-based care reform, the pauses in the Innovation Center’s advanced payment reform models have created uncertainty and concern that CMS may not be invested in advancing value-based payment models. The agency can address that uncertainty in several ways.

First, CMS needs to take specific actions to demonstrate its continued support for value-based payment, which has enjoyed strong support from prior administrations, both Republican and Democrat. For example, the Innovation Center could announce a path forward for NextGen ACOs and additional support for providers who aim to address social drivers of poor health that have contributed to health inequities.

Second, CMS needs to identify opportunities for multipayer ACO models, given that Medicare payments only account for a minority of a provider’s revenues. Some models have been developed to encourage multiple payers to come together, with mixed success. Building on lessons learned from its prior multipayer models, and with the support of collaborating organizations such as the Health Care Payment Learning and Action Network, CMS should consider more flexible models and processes that make it easier for multiple payers to adopt similar models.

Third, given the current administration’s goals related to improving equity, it should develop some major initiatives to support ACOs and similar models to address social needs. Medicaid provides the most structural avenues for addressing social needs, and future 1115 waivers and state plan amendments should support the development of ACO models that give providers flexibility to meet social needs while providing overall accountability. State COVID-19 relief funds could also be used to help build up this infrastructure, which will help underserved and hard-hit communities emerge from the pandemic and get greater access to comprehensive care. The Innovation Center’s Accountable Health Communities program could also better coordinate with regional and multipayer efforts to address social drivers of population health.

Fourth, greater movement toward ACOs based on prospective payments will help with financial resilience. ACOs that received prospective payments during the pandemic had greater financial resilience and greater flexibility to provide care through novel approaches.

Finally, CMS should expand its portfolio of mandatory payment models. Only four out of 54 Innovfation Center models have been mandatory. Voluntary participants drop out if they don’t expect economic gains, making it difficult for reforms to reduce costs. Lessons learned from past models can be used to create better mandatory models that are applicable across all Medicare providers. This would also help with evidence generation as it helps to remove selection bias and creates cleaner “intervention” versus control groups.

Conclusion

At its heart, value-based care is premised on a belief that our health care system can be significantly improved by transforming care to lower prices and improve outcomes. While the growth of ACOs has plateaued just before and during the pandemic, the movement toward value-based payment models remains strong as health care organizations, employers, and especially patients want better, more convenient, and more affordable care that is difficult or impossible to sustain under fee-for-service payment. Making this happen will require significant efforts by the public and private sectors to move from the experimentation phase to a more systematic way of supporting care transformation—and venturing into new payment frontiers for value gains.

Authors’ Note

The authors would like to thank Robert Richards for his assistance on this post, including help with data and providing helpful feedback. David Muhlestein is employed by Leavitt Partners, which consults about ACOs and works with providers and ACOs. William K. Bleser and Robert Saunders are employed by the Robert J. Margolis, MD, Center for Health Policy at Duke University, which conducts research on ACOs. William K. Bleser has previously received consulting fees from Merck on vaccine litigation unrelated to this work, consulting fees from Gerson Lehrman Group, Inc., on health policy subject matter expertise unrelated to this work, and serves as board vice president (uncompensated) for Shepherd’s Clinic, a clinic providing free health care to the uninsured in Baltimore, Maryland. Mark B. McClellan is director of the Duke-Margolis Center for Health Policy at Duke University and has received fees as an independent board member for Johnson & Johnson, Cigna, Alignment Healthcare, and Seer; as cochair of the Accountable Care Learning Collaborative and the Guiding Committee for the Health Care Payment Learning and Action Network; and as an adviser for Cota and the Mitre Corporation.

Laisser un commentaire