What’s Wrong with ACOs?
Accountable Care Organizations (ACOs) are part of a pilot program, designed by the Center for Medicare & Medicaid Innovation (CMMI), with the express goal of identifying approaches that reduce costs or improve quality of care. Our investigations show that instead, for-profit ACOs take public money intended for Medicare beneficiaries and funnel it to their investors without showing any measurable improvement in quality of care. Here are the facts:
1. ACOs increase costs. CMMI’s own 2022 Report to Congress states that the Next Generation Accountable Care Organization Model (NGACO) increased net Medicare expenditures by $243 million during the model performance period January 1, 2016 – December 31, 2021.
2. ACOs decrease dollars spent on care. The same report to congress referenced in #1 above stated that the NGACOs spent $667 million less on care for their aligned beneficiaries than Medicare spent on similar non-NGACO beneficiaries in the same markets.
3. ACOs divert public Medicare dollars to enrich private investors. Medicare payments to the participating ACOs and coordinated care rewards totaled $910 million from 2016 – 2021.
4. ACOs have not demonstrated care improvements. The 2022 report regarding NGACOs admitted that the model had no positive impact on quality.
5. ACOs lack transparency. Privately held ACOs have no requirement to disclose how they spend public Medicare funds. CMMI acknowledged this shortcoming when introducing the latest ACO model. However, their response was to commit to sharing only aggregate information for all REACH ACOs on quality and financial performance.
6. ACOs are incentivized to make patients to look sicker than they are. Like Medicare Advantage plans, ACOs are paid on a risk-adjusted basis. Risk adjustment is intended to provide more funding for patients who would benefit from more care. However, this method of payment often leads to “up-coding” which refers to adding or changing diagnosis codes on patient claims to maximize risk scores. Often, risk adjustment coding is performed retrospectively by an ACO using Artificial Intelligence and third-party services to enhance revenue.
7. ACOs impact the physician-patient relationship. Participating providers are eligible for “surplus payments” dependent on reduction of cost of care for patients aligned with the ACO during the year. This type of incentive is intended to encourage physicians to reduce hospital visits and other costly services by improving preventative care and overall health. Unfortunately, it can also incentivize providers to simply offer and encourage less care for the aligned patients. Either approach will result in greater financial rewards for the provider.
- Linda Krygier, MVHCA
