Holding organizations accountable for care utilization and outcomes while simultaneously allowing Medicare beneficiaries free access to any provider they want either inside or outside an Accountable Care Organization (ACO) is a problem, say critics of the government’s current ACO program. A new study published by JAMA Internal Medicine finds these critics may be right.

Researchers from Harvard Medical School, Brigham and Women’s Hospital and Beth Israel Deaconess Medical Center in Boston wanted to know to what extent Medicare beneficiaries assigned to an ACO stayed within that ACO for care. After all, if most patients stayed within their ACO network despite having unrestricted access to other providers, there would be little impact on the ACO’s ability to manage individual patient’s care.

On the other hand, if unrestricted access led to patients moving back and forth between different ACOs and between providers inside and outside the ACO, as critics of the system have claimed, the ability of the ACO to control costs and improve outcomes could indeed be hampered. And that is exactly what the researchers found.

The researchers looked at three measures:

1. Stability of patient assignment. Was a patient assigned to one ACO in the first year of the Medicare ACO demonstration assigned to the same ACO the following year?
2. Leakage of outpatient care. To what extent did the patient receive additional outpatient care from providers outside of the ACO?
3. Contract penetration. The amount of Medicare outpatient spending billed by an ACO that was devoted to patients assigned to the ACO.

They found that among the 524,246 beneficiaries hypothetically assigned to 145 ACOs prior to the start of the Medicare ACO programs, of those assigned to ACOs in 2010 or 2011, only 66 percent were consistently assigned in both years. Unstable assignment was most common among beneficiaries that relatively speaking might be considered healthier — those with fewer conditions who didn’t need as many office visits. However, it was also common among the beneficiaries in the highest cost categories who theoretically might have benefitted the most by having coordinated care that reduced the chance of duplication of services and unnecessary treatment over time.

Looking at leakage, the researchers found that for primary care, most beneficiaries stayed within the ACO. Only 8.7 percent of office visits with primary care physicians were provided outside of the assigned ACO. However, when it came to specialty care, the majority (66.7 percent) of office visits with specialists were provided outside of the assigned ACO. This was especially true for higher-cost beneficiaries who may have seen more specialists. Plus, the trend applied even to ACOs oriented toward providing specialty care.

Finally, when it came to contract penetration, the average percentage of Medicare spending devoted to assigned beneficiaries by ACO outpatient physicians was 37.9 percent. This was higher if the ACO was primarily oriented toward primary care. However, even these ACOs provided a great amount of care to non-assigned beneficiaries limiting the influence ACO payment would have over traditional fee-for-service.

In a letter sent earlier this month to the Centers for Medicare and Medicaid Services (CMS), the American Hospital Associations warned of exactly these types of problems and noted that assigning beneficiaries to ACOs retroactively and essentially keeping both providers and beneficiaries in the dark about who is and isn’t part of the ACO could doom the program to failure.

Only 114 organizations remain in the Medicare Shared Savings Program ACO model and of those, less than half (54) have achieved savings. In addition, of these 54, only 29 saved enough money to receive “shared savings” bonuses.

In an accompanying editorial in JAMA Internal Medicine, noted health economist Paul B. Ginsburg, Ph.D., of the Sol Price School of Public Policy at the University of Southern California, Los Angeles (UCLA) wrote that the results of the researchers' study were predictable considering the design of the Medicare ACO project and the differences between it and ACO projects run by private insurers, which restrict ACO patients’ access to providers outside of the ACO.

“Only policy makers wary of touching the so-called third rail of American politics — changing Medicare in a way that limits the ability of beneficiaries to obtain care in whatever manner they choose, fragmented or otherwise — would devise such a scheme,” Dr. Ginsburg wrote.