CHART REVIEW Accountable Care Organizations (ACOs)

Ryan Haygood, Health Care Policy Intern

As part of the ACA’s move from volume- to value-based payments, Medicare formed its first shared-savings contracts in 2012 with dozens of Accountable Care Organizations (ACOs), groups of providers that voluntarily coordinate care in an effort to cut costs without compromising quality. Under the program, if an ACO generates cost-savings while adhering to certain quality standards, Medicare reimburses it a share of the savings. That share is 50 percent for one-sided, “upside-only” contracts, which hold the ACO harmless if its costs grow, and 60 or 75 percent of savings for two-sided contracts, which penalize ACOs for cost-growth. By imposing real risks on these two-sided ACOs, Medicare hopes to incentivize further cost-savings, and it intends to phase out upside-only contracts and move these into the expanded-risk model over time. Indeed, two-sided contracts have historically outperformed the one-sided model, but uptake has been slow — 82 percent of 2018 ACOs are still upside-only. Program-wide cost savings remain meager, and it’s unclear if expanding two-sided models will move the needle, since ACOs that have opted for downside risk may have done so because they expected high savings to begin with.

https://www.americanactionforum.org/weekly-checkup/where-does-it-go-from-here-drug-pricing-policy-after-the-rebate-rule-reversal/#ixzz5uRyRLg00
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