In 2018, 33% of accountable care organizations (ACOs) assumed downside risk, up from 28% in 2012.
While the number of accountable care organization (ACO) contracts with downside risk is growing, the majority of ACOs remain in upside-only risk contracts, according to a new study. In 2012, 28% of accountable care organizations (ACOs) had a contract with downside risk. That rate increased modestly to 33% in 2018.
However, according to study researchers, the number of ACOs has increased approximately 5-fold during the time period, which could mean that the number of ACO downside risk contracts also grew significantly.
Although the increase in the amount of ACOs taking on downside risk remains modest, there has been significant growth in not just the number but also the variety of contracts implemented by ACOs, including in the number of payers they contract with. In 2012, 42% of newly formed ACOs had contracts with 2 or more payer types compared with 63% of ACOs in 2018.
As ACOs have emerged as one of the most broadly implemented value-based payment models, CMS has been pushing ACOs to take on more financial risk. In December 2018, the agency finalized Pathways to Success, its overhaul of the Medicare Shared Savings Program, which will push ACOs to assume risk more quickly. Notably, the program replaced the traditional 3 tracks with 2 new tracks in which ACOs will start in a 1-sided model and incrementally phase in higher levels of risk. Down from the current 6 years, ACOs will be able to stay in 1-sided risk for 2 years and existing ACOs will be able to stay for 1 more year.
The researchers of the new study, published in Health Affairs, drew on data from the National Survey of Accountable Care Organizations, finding that ACOs taking on downside risk were more likely to have more experience with other forms of risk-bearing contracts.
“Prior work indicates that ACO participants with risk-bearing experience are more likely to achieve shared savings with the Medicare program,” wrote the researchers. “Therefore, the assumption that inducing more ACOs to bear downside risk would result in increased savings should be questioned, based on what is known to date.”
Among the 419 ACOs that completed the survey in 2018, those assuming downside risk were less likely to be physician led (43% vs 57%) and instead more likely to be jointly led by a hospital and physicians, led by a hospital, or led by another arrangement, including coalitions and regional, county, or state organizations. They were also less likely to be physician owned than other ACOs were (30% vs 39%).
“While similar in proportion of ownership by hospitals, downside-risk ACOs were more likely than other ACOs to be owned by other entities, including public ownership, non-profit ownership, or another privately owned for-profit entity,” reported the researchers.
The survey results also indicated that ACOs taking on downside risk were more likely to:
Peck K, Usadi B, Mainor A, Fisher E, Colla C. ACO contracts with downside financial risk growing, but still remain in the minority [published online July 1, 2019]. Health Aff (Millwood). doi: 10.1377/hlthaff.2018.05386.