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Commercial ACOs Are Larger, More Efficient Than ACOs With Public Payer Contracts


The number of accountable care organizations (ACOs) has grown rapidly over the last 4 years, with more than 800 ACOs now covering an estimated 28 million Americans. A study found that commercial ACOs were significantly larger and more integrated with hospitals and had lower benchmark expenditures and high quality scores compared with noncommercial ACOs.

The number of accountable care organizations (ACOs) has grown rapidly over the last 4 years, with more than 800 ACOs now covering an estimated 28 million Americans, and it is expected that the number of ACOs will quadruple over the next 5 years.

Using data from national surveys of 399 ACOs from 2012 to 2015, a group of researchers led by David Peiris, MBBS, PhD, MIPH, of the Harvard T.H. Chan School of Public Health examined differences between the 228 commercial ACOs (those with commercial payer contracts) and 171 noncommercial ACOs (those with only public payer contracts such as Medicare or Medicaid) and found that ACOs with commercial contracts outperform ACOs with public-payer contracts on selected measures of quality and process efficiency. The differences in performance are linked to variation in organizational structure, provider compensation, quality improvement activities, and management systems, and the study concludes that the public sector should play a lead role in supporting and guiding the future growth of ACOs if they are to achieve desired quality and efficiency gains. The study was published in Health Affairs.

Commercial ACOs were significantly larger and more integrated with hospitals, and had lower benchmark expenditures and higher quality scores, compared with noncommercial ACOs. Among all of the ACOs, there was low uptake of quality and efficiency activities. But the study found that commercial ACOs reported more use of disease-monitoring tools, patient satisfaction data, and quality improvement methods than noncommercial ACOs did. Furthermore, the study found that few ACOs reported having vigorous quality-monitoring capabilities or having financial incentives tied to quality.

Other findings included the following:

  • Commercial ACOs are much more likely than noncommercial ACOs to include one or more hospitals (41% vs 19%) and to be jointly led by physicians and hospitals (60% vs 47%). Commercial ACOs had lower expenses per Medicare enrollee ($10,000 vs $12,000) and slightly higher scores for quality of care.
  • Commercial ACOs tended to be more active in connecting physician compensation with quality incentives and were more likely to tie specialists’ compensation to quality metrics.
  • Even among commercial ACOs, only 60% provide clinical-level performance feedback or use patient satisfaction data for quality improvement and only 30% reported well-established chronic care programs.
  • All ACOs face major health information technology challenges. Only about 30% of commercial ACOs use a single electronic health record (EHR) system and among noncommercial ACOs less than 20% use a single EHR system.

ACO leaders and policy makers must focus on organizational structure, health information technology, physician engagement and incentives, and quality improvement if desired improvements in quality and efficiency in ACOs are to occur. Currently, ACOs are early in their evolution and many currently lack essential building blocks to bring about needed improvements in quality and efficiency, the authors believe.

Both commercial and noncommercial ACOs need to make large investments in critical infrastructure in order to support delivery system reform, the investigators wrote, particularly coordination of quality-improvement activities and related financial incentives for physicians and improved information technology platforms.

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