Report: Larger, urban ACOs more likely to take on financial risk

Accountable care organizations (ACO) that have switched tracks to take on downside risk tend to be larger, located in urban areas, and more successful on financial metrics, according to a recent report. However, the report did not find any significant relationship between switching to downside risk tracks and improvement on quality or public health metrics. The report, released February 25 by Leavitt Partners, analyzes data from ACOs that switched to downside risk tracks to learn how other ACOs can succeed in those tracks and identify ways that CMS may be able to fine-tune tracks to improve results.

Overall, switching tracks appears to have benefited ACOs. According to the report, ACOs that switched tracks had higher savings rates, higher gross savings per beneficiary, and higher net savings per beneficiary to CMS.

A common concern among stakeholders is that ACOs’ success in downside risk tracks depends on patient population. The report did find that health behaviors and chronic conditions were more favorable in the populations of ACOs that switched tracks compared to those that did not. In particular, track switchers’ populations had a lower incidence of diabetes. However, there was no significant difference for prevalence of obesity or non-skin cancer.

The report concludes that ACOs face at least two barriers to taking on downside risk. Smaller organizations have a harder time switching to downside risk tracks because they have lower capital and fewer providers and patients. However, CMS’ proposed Pathways to Success program may help alleviate this concern by allowing low-revenue ACOs to remain in upside-only risk tracks for a longer time than other ACOs. Also, ACOs that have not switched to downside risk tracks appear to be less familiar with risk-sharing in general, according to the report.

All ACOs should prepare to take on greater downside risk and learn from those organizations that have successfully made the transition. In December 2018, CMS published a final rule that reduced the amount of time ACOs can stay in one-sided risk models. The final rule’s accelerated risk-sharing models went into effect February 14. New physician-led, or low-revenue, ACOs will be allowed to remain in a one-sided risk model for three years, down from six. All other ACOs will be permitted only one year before they must share financial risk.