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Transitioning to Organized Systems of Care: Near-Term Recommendations to Improve Accountable Care Organizations in Medicare

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The results from the first two years of Medicare’s ACO programs are in, and those results show a mix of modest successes and significant challenges. Specifically, quality results were disappointing in many cases, and most ACOs generated modest or no savings?especially in the Medicare Shared Savings Program. The Medicare ACO programs are the only APMs to be implemented so far with a scope that incorporates the vast majority of health services (essentially all Medicare-covered services except for prescription drugs); other APMs, such as bundled payment and patient-centered medical homes, focus on smaller subsets of services. Because of the broad scope of services covered and coordinated, advocates for a population health approach to payment and delivery system reform point to ACOs as a promising concept to ensure that providers have more responsibility for health outcomes, patient satisfaction, and spending across a broad range of care settings and service types. Some of the performance challenges of ACOs in the first two years may result from implementation issues and the short timeframe for results. But many of the challenges are due to program design issues, which can and should be addressed.

In 2013, BPC outlined a long-term vision for payment and delivery system reform in Medicare, which included a proposal for three Medicare options for both providers and beneficiaries: (1) a reformed fee-for-service option with modernized cost-sharing and improved protections for beneficiaries; (2) an enrollment-based ACO model called Medicare Networks with strong incentives for providers and patients to participate; and (3) a reformed, competitively priced Medicare Advantage program. Medicare’s current ACO programs lack many of the features that were proposed in BPC’s Medicare Networks concept. Many of these features?such as giving providers clearer expectations, engaging beneficiaries directly with the ACOs, and establishing stronger incentives for both providers and beneficiaries to participate?could help improve the success of Medicare ACOs.

Read more from BPC’s series on delivery system reform.

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