Accountable care organization pathways: diverse but ultimately parallel.

A prescient visitor from Mars might easily conclude that the US health reform debate is actually a diversion. Most of what he hears and reads is about whether the federal government has the authority to require all individuals to obtain health care coverage so that it can reorganize insurance markets to serve all of us and not just some of us. Now, these are indeed important issues, although they are primarily philosophical and moral, respectively, but readers of Mayo Clinic Proceedings know that the most important part of our health reform debate is over delivery system reform. Simply put, effective access for tens of millions of Americans is at risk—not to mention most other public priorities and middle-class jobs in a global economy—if we fail to improve the efficiency with which high-quality care is delivered. Excessive growth of health care costs is by far the largest contributor to our fiscal stress and stagnant middle-class standard of living. After all the Sturm und Drang, this is why the Patient Protection and Affordable Care Act (PPACA) was finally passed, although it is hardly a panacea or guarantor of desirable outcomes. Powerful interests are threatened by an emphasis on efficiency, quality, and evidence-based care, and many are finding the necessary transition—from pay-for-volume fee-for-service to any new payment system that rewards value instead—to be something between a heavy lift and a long hard slog. We are nowhere near the end of the beginning of health care system transformation in our nation. No single idea for transforming health care delivery in the past few years has received half as much attention as accountable care organizations (ACOs). Advocates1 and Administration officials2 alike repeatedly emphasized the centrality of population-based coordinated care and incentive realignment with risk bearing and sharing so that health care institutions' financial interests could be linked to the efficient delivery of high-quality care. The PPACA, reflecting its authors' strong desire to jump-start our move away from volume-based payment methods, included an unprecedented new nationwide program, as opposed to a more typical narrowly focused demonstration or pilot project, that offered new payment and quality reporting rules to any set of Medicare-participating physicians and hospitals willing to accept the brave new challenges of accountable care. Participation in how-to conferences and collaboratives spread like wildfire, for it seemed like the movement to full financial and performance risk for a defined patient population was the clear direction American health care policy was moving. But then the initial Medicare Shared Savings Program ACO proposed rule (set of regulations) was released, and enthusiasm turned to disappointment, anger, and a search for viable alternatives. The Center for Medicare and Medicaid Innovation (CMMI), created by the PPACA to be the catalyst for delivery system reform, as quickly as possible developed an alternative model pilot ACO project, aptly named Pioneer ACO, even as it digested the tsunami of formal comments about how to improve the Shared Savings ACO model proposed rule. The final shared savings rule was far more palatable to most observers, although only 32 and 116 organizations have signed on to become Pioneer and Medicare Shared Savings Program ACOs, respectively, at this point. While they have important differences, both ACO concepts share 3 key features for health care organizations: (1) accept clinical and financial responsibility for a defined group of Medicare beneficiaries, essentially practice population health management, (2) measure and report a wide array of quality metrics, and (3) benefit financially vs baseline if, and only if, quality and cost saving targets are met. The major difference in the models is the much greater degree of financial risk and reward allowed to and expected of Pioneer ACOs, for they are required to accept population-based payment risk by year 3 for certain Medicare beneficiaries and to have at least 50% of their private payer contracts also be risk based by then, in the hope of spreading the payment innovation to the health care system more generally. It is also worthy of note that the Pioneer pilot is larger than the Medicare Shared Savings Program. However, the small number of ACOs in total, after all the discussion during the legislative debate and in the year before the first proposed rule came out, is a disappointing indicator of the reality that most health care organizations are still reluctant to move from fee-for-service to outcomes-based payment without more protection and support. In the commentaries published in this issue of Mayo Clinic Proceedings, 6 leading health care institutions explain why they did or did not decide to participate in 1 of the 2 ACO models now operational at the Centers for Medicare and Medicaid Services (CMS). I will certainly let the authors speak for themselves, but as an economist, I should highlight some fascinating common themes.