Last month’s decision by the Palestinian Authority to schedule municipal elections in early October hardly registered in the West Bank and Gaza Strip, much less here in Washington. In light of Hamas’ recent decision to take part in the process, however, those elections have suddenly taken on new meaning. While the election of some 414 village, town, and city councils across the West Bank and Gaza Strip will not change the face of the Palestinian leadership or alter the diplomatic impasse with Israel, local elections have the potential to unlock the current paralysis within Palestinian politics.

Although Palestinian law calls for local elections to take place every four years, they have only been held twice since the creation of the Palestinian Authority (PA) in 1993, only one of which could be deemed genuinely competitive. The first and only local elections to take place in both the West Bank and Gaza Strip were held in 2004-05, in which Hamas—in its first foray into electoral politics—made major gains. Local elections were again held in 2012, although this time Hamas boycotted the process, preventing the vote from taking place in Gaza and allowing Fatah to declare a sweeping, if somewhat hollow, victory. 

Hamas’ decision to take part in this year’s local elections was therefore something of a surprise. Indeed, Hamas initially expressed dismay at the announcement, accusing the leadership in Ramallah of acting without consulting the other parties. Moreover, should the elections proceed as planned on October 8, they would be the first competitive electoral contest in the occupied territories since Hamas defeated Mahmoud Abbas’s ruling Fatah faction in the 2006 legislative election. Those elections triggered an international boycott of the PA which eventually led to the split between Fatah and Hamas and the current political paralysis.

If nothing else, Hamas’ entry into the elections averts another needless internal crisis in Palestinian politics. A boycott by Hamas would likely have further entrenched the political and geographic division between the Fatah-dominated West Bank and Hamas-ruled Gaza Strip, while dealing yet another blow to the beleaguered National Consensus Government, which despite being accepted by both factions in April 2014 has yet to physically return to Gaza. Movement on the reconciliation track could also help push the long-stalled reconstruction of Gaza, which has yet to recover from the devastating war of 2014.

Hamas has little to lose from participating in an election that is unlikely to significantly alter the political landscape one way or the other...[and Fatah] has little to gain from “winning” another electoral process that is largely uncontested.

What explains Hamas’ apparent change of heart? For one, Hamas may believe it has an advantage over Fatah, which continues to suffer from widespread perceptions of corruption and incompetence—a perception reinforced by the collapse of the peace process as well as the unprecedented unpopularity of President Abbas. Hamas may also view the upcoming vote as a way to gauge its current standing and future prospects in anticipation of long-awaited legislative and presidential elections. Either way, Hamas has little to lose from participating in an election that is unlikely to significantly alter the political landscape one way or the other. 

Hamas’ decision to participate in the elections is welcome news for Palestinian voters eager to see the return of competitive elections and a revival of political life after years of stagnation. It even helps Fatah, which has little to gain from “winning” another electoral process that is largely uncontested. More important, as the party that lost both parliamentary elections and a civil war in 2006-07 and that remains the chief proponent of a failed process, Fatah desperately needs a political victory of some kind as well as a basis on which to stake its claim to legitimacy and continued grip on power.

That said, it is important not to overstate the significance of local elections, which in the end will do nothing to address the deeper problems facing Palestinians in the occupied territories, whether from Israel’s continued occupation and its ever-expanding settlement enterprise or the ongoing political dysfunction within their own ranks. On the other hand, the prospect of the first competitive Palestinian elections in a decade represents a small but significant ripple in the otherwise stagnant waters of Palestinian politics.

There are now more than 335 Accountable Care Organizations (ACOs) participating in the Medicare Shared Savings Program (MSSP) in 47 states, DC, and Puerto Rico. Early results show that most Medicare ACOs are succeeding at meeting their quality benchmarks, but only about a quarter of MSSP participants have been able to reduce their spending enough below projected financial targets to qualify for shared savings. While these results are encouraging, especially given the financial and practice transformation necessary to succeed as an ACO, they also suggest that more work is needed from both CMS and the providers to ensure continued sustainability of the MSSP ACOs.

Given that the first three year cycle of MSSP ends in 2015 and more providers will likely be entering the MSSP in the coming years , the Centers for Medicare and Medicaid Services (CMS) has indicated that they intend to release a Notice of Proposed Rulemaking (NPRM) that will establish the rule for participation in the Medicare ACO program. In anticipation of these coming changes, the Engelberg Center for Health Care Reform released an issue brief that identifies the "Top Eight ACO Challenges" to encourage further discussion and considerations for ensuring the continued success of ACOs. These potential policy alternatives build on discussions with ACO Learning Network members and other related stakeholders implementing accountable care across the country and include the following issues.

These issues, and many others, will be a focus of the discussions at the upcoming Fifth National ACO Summit later this week.

Top Eight Medicare ACO Challenges

1. Make Technical Adjustments to Benchmarks and Payments
In order for ACOs to qualify for shared savings, they must be able to hold spending below a financial benchmark set using historical spending patterns and meet a certain threshold of person and population-level quality metrics. A number of issues should be considered that affect the ACO’s chances of being able to attain shared savings and have more predictability about their performance: benchmark calculation methodology, how to adjust for regional variation in performance, and risk adjustment.

2. Transition to More Person-Based Payments
The ultimate goal of an ACO is to improve quality at the patient and population level and control the growth of health care costs. In order to successfully achieve this mission, ACOs must over time make a transition to payments that involve the assumption of more risk by the provider organization with a reward for better health outcomes for groups of patients. ACOs must have a clear transition path for increasing accountability and assumption of more risk for patient health outcomes.

3. Increase Beneficiary Engagement
Patients can play a critical role in helping to achieve the goals of an ACO. Health outcomes are determined by whether patients follow prescribed therapies. Increasing beneficiary engagement holds the potential to make patients more activated members of the ACO who can contribute to its success. A number of issues should be considered to improve beneficiary engagement, including adjusting attribution methods, creating more incentives for patients to seek care within the ACO, and finding opportunities to activate patients as part of the care team.

4. Enhance and Improve Alignment of Performance Measures
A central tenet of Medicare ACOs is delivering high quality health care as determined by performance on 33 measures established by CMS. ACOs must meet performance benchmarks in order to be eligible for shared savings, ensuring that these organizations are delivering high value, rather than simply cheaper, care. A number of barriers exist to achieving better performance measurement, including administrative burdens, lack of measure alignment among payers, lack of rewards for quality improvement, and concerns about measure selection.

5. Enable Better and More Consistent Supporting Data
In order to succeed as an ACO, organizations must be able to effectively collect, interpret, and use clinical and claims data to transform care of their patients. ACOs need to adopt new health IT systems and other technologies in order to collect and use the growing amount of data. ACOs currently struggle with reconciling data between different sources, dealing with patients who opt out of data sharing, lack of timeliness for receiving data, difficulty of tracking patients through the health system, and delays in performance feedback.

6. Link to Additional Value-Based Payment Reforms
ACOs are just one of many payment reforms that health care organizations across the country are implementing to improve quality and reduce costs. Aligning the vision and components of these other initiatives with ACO reforms has the potential to reinforce the shared goals and fundamentally change the health system. However, there are barriers to achieving this alignment such as lacks of linkages to bundled payments and other new payment models, multi-payer ACOs with different payment systems, and inability for organizations to participate in multiple CMS payment innovations.

7. Develop Bonus Payments and Other Incentives to Participate
In order to effectively transform clinical practice, ACOs must create or procure significant financial and human capital, as well as transform their information technology and delivery infrastructure. A recent survey estimates the average start-up cost for creating an ACO to be $2 million, with some ACOs investing significantly more in their first few years. Many ACOs, especially smaller ones, struggle to find sufficient start-up capital, are uncertain if they can assume the level of risk required for an ACO, and need significant staff and clinical change to effectively transform care.

8. Support Clinical Transformation
Becoming and succeeding as an ACO is a vast undertaking that requires immediately beginning to transform practice, finance, and operations. However, many providers, particularly those that are less experienced at systemic practice transformation, need more support in undertaking clinical transformation.

Downloads

• Issue Brief: Improving the Medicare ACO Program

Contributors: Alice M. Rivlin and Christine Dang-Vu

Recent data suggest that Accountable Care Organizations (ACOs) are improving important aspects of care and some are achieving early cost savings, but there is a long way to go. Not all ACOs will be successful at meeting the quality and cost aims of accountable care. The private sector has to date allowed more flexibility in terms of varying risk arrangements—there are now over 250 accountable care arrangements with private payers in all parts of the country—with notable success in some cases, particularly in ACOs that have been able to move farther away from fee-for-service payments. Future growth of the Medicare ACO program will depend on providers having the incentives to become an ACO and the flexibility to assume different levels of risk, ranging from exclusively upside arrangements to partial or fully capitated payment models.

Given that the first three year cycle of Medicare ACOs ends in 2015 and more providers will be entering accountable care in the coming years, the Centers for Medicare and Medicaid Services (CMS) has indicated that they intend to release a Notice of Proposed Rulemaking (NPRM) affecting the Medicare ACO program.

In anticipation of these coming changes, the Engelberg Center for Health Care Reform has identified the "Top Eight ACO Challenges" that warrant further discussion and considerations for ensuring the continued success of ACOs across the country. To support that discussion, we also present some potential alternatives to current Medicare policies that address these concerns. These findings build on the experiences of the Engelberg Center’s ACO Learning Network members and other stakeholders implementing accountable care across the country.  In some cases, the alternatives might have short-term costs, but could also improve the predictability and feasibility of Medicare ACOs, potentially leading to bigger impacts on improving care and reducing costs over time.  In other cases, the alternatives could lead to more savings even in the short term. In every case, thoughtful discussion and debate about these issues will help lead to a more effective Medicare ACO program.

Top Eight ACO Challenges

1. Make technical adjustments to benchmarks and payments
2. Transition to more person-based payments
3. Increase beneficiary engagement
4. Enhance and improve alignment of performance measures
5. Enable better and more consistent supporting data
6. Link to additional value-based payment reforms
7. Develop bonus payments and other incentives to participate
8. Support clinical transformation

Downloads

• Issue Brief: Improving the Medicare ACO Program

ACOs have to assess both the opportunities and the challenges in pursuing risk based payment arrangements. However, there are key strategies ACOs can adopt to help with the transition to greater financial accountability, and higher levels of performance. On July 16^th, our ACO Learning Network hosted a webinar that explored critical success factors and barriers, as well as potential lessons for ACOs to increase their risk-bearing capacity.

Different Payment Models Pose Unique Challenges

Drawing upon an issue brief authored with colleagues from the American Academy of Actuaries, Greger Vigen highlighted some of the actuarial concerns inherent in various risk-based payment models. For example, when organizations undertake one-sided or “bonus only” shared savings arrangements, the arrangement should create incentives that are adequately aligned across the system to reward physicians that are providing not just cost-efficient, but also high-value, care. They must also find ways to create additional non-financial support when the size of provider shared savings is minimal. Both one-sided and two-sided shared savings models can lead to complex calculations in determining the true amount of savings resulting from the arrangement. Organizations undertaking bundled or episode-based payments must clearly determine what is included in specific bundles in order to justify assuming risk for those services.  Although partial capitation lends itself to an increased level of risk by creating strong incentives to reduce inefficiencies in certain parts of the system, such arrangements create effects on areas not covered by the partial capitation arrangement. Finally, by virtue of the increased risk level, global payment arrangements raise solvency considerations for organizations and require significant investment in infrastructure (or use resources from aligned partners) to manage utilization and facilitate appropriate organizational culture change. As programs move forward, there may be a combination of approaches used, including broad risk sharing or partial capitation arrangements between buyer and provider organizations. At the same time, more focused initiative may be used between the provider organization and the provider partners, such as bundled payments or partial capitation to certain providers. 

Critical Elements of High Performing Systems

Regardless of which risk-type arrangements ACOs choose to pursue, there are some critical elements that most high-performing systems share. According to Vigen, high-performing systems typically use a highly analytic process to understand their performance over time, rely on financial committees that are clear and “blunt” about the organization’s financial state, have in place multiple targeted financial initiatives, use payment reform to show how expenses could reduce revenue across multiple specific cases, have advanced clinical reporting systems, develop strong partnerships within and outside the organization to transform care, and use “next generation” analytic tools from outside organizations. Vigen contends that, in order to succeed at true transformation, organizations must develop initiatives aimed specifically at financial results, to supplement other initiatives designed to simply improve quality.  Building around these initiatives provides targeted results that can effectively engage and utilize actuaries. Actuaries and other external partners can help ACOs to more fully address financial issues and develop a framework for the prioritization and allocation of resources that identifies which existing processes to discontinue and which new processes to initiate.

Jim Whisler, a Principal at Deloitte Consulting, added that there are a number of opportunities to realize savings, many of which can be achieved through reducing variation. He emphasized that ACOs should take advantage of “low hanging fruit” that decrease utilization and optimize costs, such as ensuring appropriate use of generic and specialty pharmaceuticals, reducing inpatient stays, increasing use of ambulatory surgery center (ASC), and understanding appropriate use of lab, radiation, MRI, and CT scans. Savings and gain sharing can also vary between the different providers—primary care, specialists, and hospitals.  Ultimately, actuaries and clinical staff alike must be able to analyze data and pinpoint the true drivers of variation.

Effective Strategies Can Yield Significant Cost and Quality Improvements

In order to shed more light on how these strategies can be deployed in health systems, Bart Wald, Chief Executive for Physicians Services at Providence Health and Services, discussed the approaches that he undertook as President and CEO of Physician Associates of the Greater San Gabriel Valley, an IPA in California. Unlike compensation in most IPAs, which often relies either on fee-for-service (FFS) or capitation, Physician Associates, developed a system that uses a combination of both payment models. While capitation has traditionally been used more for primary care physicians (PCPs) than specialists, Dr. Wald emphasized that developing financial incentives for specialists was critical to effectively engaging them.  In his mind, specialists must be integrated and engaged in order to create a truly effective model. The IPA also created a “peer satisfaction” bonus program, in which PCPs and specialists rate each other and those attaining the highest ratings are given an additional bonus payment. The ratings are also posted on the web to increase transparency, and impact physician behaviors. In addition to engaging specialists, Physician Associates made sure to integrate hospitalists into the care team and incorporate social services and mental health staff.

The IPA was able to further transform care by building a population health infrastructure that directed funds towards ambulatory care management, patient-centered medical home (PCMH) development, complex care centers and disease management programs for vulnerable patients. They have also focused on improving the collection and sharing of patient data to better manage generic drug utilization, prescribing and adherence; track and attempt to minimize care received by patients outside of the physician network; and ensure effective continuity of care across the system. In summary, Dr. Wald stressed a number of factors for succeeding at risk-sharing—engaged practice members, adequate physician incentives to improve care performed in the outpatient setting, hospitalists and outpatient coordination on referrals, more advanced pharmacy management, extended disease registries, and integration between physicians and hospitals that includes joint expense management and other synergies. These interventions have resulted in a noticeable improvement in quality of care and led Physician Associates to run at a price and expense advantage below IPAs using a purely FFS payment model.

Dr. Wald also discussed an example of how hospitals are attempting to improve performance through creative partnerships with medical staff using a joint venture limited liability corporation between Providence Health Systems California and local physicians to reduce the occurrences of specific clinical conditions, such as hospital acquired complications, readmissions, and sepsis mortality. These physicians participate in a shared savings model.

Successful Risk-Sharing Arrangements Take Time

While the interventions described above may work and possibly work very well, truly effective risk-sharing design is an iterative process. Organizations must be nimble and able to adapt and modify tactics as necessary. As Greger Vigen emphasized, payment reform can be used as a tactic at the provider level in additional to a broad strategy or vision between provider and buyer.

Downloads

• Issue Brief: Improving the Medicare ACO Program

The Centers for Medicare and Medicaid Services (CMS) recently reported more optimistic news about the Medicare Accountable Care (ACO) Program, which began in 2012.  CMS released final first year financial and quality results for the Medicare Shared Savings Program (MSSP) ACOs and preliminary year two financial and quality results for the Pioneer ACO Model (Pioneer ACOs).

Financial Results: To date, the two programs have generated savings of $817 million—$372 million of which has been saved by Medicare and another $445 that has been returned to the ACOs through shared savings. While these savings are not final calculations, they suggest that both programs have produced modest savings in the first two years with some variability across ACOs.

Pioneer ACOs: Pioneers, generally considered more advanced ACOs, were able to generate more total program savings in year two than in year one ($96 million vs. $87 million), while also qualifying for shared savings payments of $68 million. The Medicare Trust Fund saved approximately $41 million in year two of the Pioneer program. In total, Pioneer ACOs were able to achieve an approximately 1% lower spending trend overall for the Medicare population than fee-for-service (1.4 vs. 0.45 percent lower per capita growth). Seventeen of the 23 Pioneer ACOs had positive or neutral financial performance, eleven of which were able to slow health spending enough to share in savings. On average, those ACOs saved $4.2 million in 2013, up from $2.7 million in 2012; shared savings grew from $1.2 million to $13 million. Six Pioneers generated losses, three of which were significant enough to require those Pioneer ACOs to share in the losses. While remaining Pioneers have been able to attain bigger savings in year two of the program, almost a third of original participants have left the program—some have moved to the lower risk MSSP, while others have focused on commercial ACO contracts or higher levels of risk in MA programs.

MSSP ACOs: MSSP ACOs were likewise able to reduce overall cost trend by slightly less than 1 percent. Of the 220 MSSP ACOs that started in 2012 or 2013, roughly one-quarter (53) were able to reduce spending enough to qualify for total shared savings of over $300 million. An additional 52 ACOs reduced spending compared to their benchmarks, but not enough to qualify for shared savings. One ACO that opted for track two (two-sided financial risk) overspent its benchmark by $10 million and owed shared savings of $4 million. MSSP ACOs as a whole were able to reduce spending by $652 million below their financial benchmarks and saved the Medicare Trust Fund $345 million, including repayment for the track 2 ACO losses.

Quality Results
Medicare ACOs continue to improve significantly on overall quality scores.  Both Pioneer ACOs and MSSPs have been able to attain higher average performance than quality benchmarks and better performance than Medicare fee-for-service on measures with data, such as colorectal screening, tobacco cessation, and depression screening.

Pioneer ACOs: All 23 Pioneer ACOs that remain in the program out of the initial 32 successfully reported their quality measures in their first two years.  The mean quality scores for Pioneer ACOs increased by 19 percent, from 71.8 percent in 2012 to 85.2% in 2013. Pioneer ACOs increased average improvement by 14.8 percent across all quality measures and overall improvement on 28 of 33 quality measures. Patients also report a positive experience receiving care from Pioneer ACOs—the ACOs improved average performance scores for patient and caregiver experience across 6 out of 7 measures.

MSSP ACOs: MSSP ACOs, as a group, posted even more improvement in quality scores than the Pioneer ACOs. MSSP ACOs starting in 2012 and 2013 were able to improve 30 of 33 quality measures, including measures such as patients’ rating of clinicians’ communication, beneficiaries rating of doctors, health promotion and education, screening for tobacco use and cessation, and screening for high blood pressure. In total, MSSP ACOs are experiencing higher CAHPS patient experience survey scores than Medicare fee-for-service, suggesting that patients are engaged and satisfied with being a part of an ACO. Additionally, MSSP ACOs achieved higher average performance rates on 17 of 22 Group Practice Reporting Option (GPRO) Web Interface measures reported by other large physician group fee-for-service providers.  Over 125,000 eligible providers or supplier members of ACOs qualified for incentive payments through PQRS (Physician Quality Reporting System) in 2013. Unfortunately, nine MSSP ACOs failed to successfully report their quality scores, four of which would have otherwise qualified for shared savings.

Digging Deeper into the Results
While program level analysis of financial performance is meaningful, a deeper analysis of the data and organizational characteristics of those MSSP ACOs that earned shared savings reveals some interesting trends. A little over half of those earning shared savings were physician-led ACOs (26/49) and more than a third of these physician led ACOs operate in Florida (10/26). The continued success of physician-led ACOs is consistent with previous findings that these ACOs may be better positioned than institutionally-based ACO to reduce overall costs. In addition, analysis by The Center for Medicare and Medicaid Innovation (CMMI) found that there is no relationship between savings/loss performances and whether the ACO included a hospital. Hospital-led ACOs were overall less likely to share in savings than physician-led ACOs. These two findings together suggest that ACOs can experience success even without an official hospital affiliation, paving the way for more physician practices to join and excel at accountable care.

Interesting regional trends are beginning to emerge from the data. Florida and Texas had the highest concentration of ACOs sharing in savings. Of the 30 Florida-based MSSP ACOs, more than a third (11) were able to share in savings, while almost half (7/15) Texas-based MSSP ACOs qualified for shared savings. Furthermore, the top two earning MSSP ACOs were from Texas (Memorial Herman with $28.34 million) and Florida (Palm Beach ACO with $19.34 million), respectively. The concentration of shared savings in these two states raises important questions about what is driving the high level performance. Are these MSSPs more likely to succeed because of a higher financial benchmark based on disproportionately greater regional Medicare spending? Do these ACOs have a leg up from the start because of their patient population and historical spending trend? Are physician ACOs more likely to form and succeed in these higher-cost areas? The success of these programs should not be understated, but further analysis may be needed to better understand performance drivers so appropriate program adjustments may be considered to level the playing field among MSSP ACOs across all regions.

Next Steps
While these latest Medicare ACO results are encouraging, more work needs to be done. The Pioneer Program recently lost its tenth program participant, Sharp Healthcare, bringing the total number of Pioneers down to 22. Like some other Pioneers that have exited the program, Sharp was dissatisfied with the benchmark and payment methodology and was no longer willing to assume financial risk that they felt was too great. This is just one among many policy and implementation issues with which Medicare ACOs are struggling. In June, we published a set of recommendations to ensure the long-term sustainability of the Medicare ACO program by addressing eight major ACO challenges. These results seem to reinforce the need for several of these recommendations for change in the Medicare ACO Program.

CMMI, which administers the Pioneer ACO Program, has recognized some of these challenges and has begun giving ACOs some greater flexibility in operating within the program. These changes include allowing them to move to population-based payments, waiving the 3-day hospitalization rule to allow ACOs to directly admit qualified patients to skilled nursing facilities, and experimenting with “voluntary alignment” to allow beneficiaries to attest to a primary care physician to offset some of the limitations of the existing attribution process. These are moves in the right direction; however CMS must continue to engage providers across the country to make sure the program remains viable.

Meanwhile, the MSSP will add another round of participants in January 2015 and CMS is expected to release a notice of proposed rulemaking that will amend the current operating requirements for the MSSP program later this year. The scope and nature of changes could dramatically impact the interest of new organization, as well as the continued participation of current MSSP and Pioneer ACOs.  Medicare ACOs will likely be encouraged to continue innovating to improve quality and reduce costs in the Medicare program, but the Medicare ACO program must continue to evolve to meet provider and beneficiary needs to ensure continued success.

Note: This blog has been corrected since its original posting on September 22 to reflect more accurate data.

Downloads

• Changes to Medicare ACO Program

The Centers for Medicare and Medicaid Services (CMS) recently released more detailed ACO-level data for participants in first two years of the Pioneer ACO Model. The program, which is designed for health systems with more experience assuming financial risk for patient populations, has generated savings and improvements in quality measures, but has also struggled to retain participants. The program began with 32 provider organizations; following a series of recent announcements there are now 19 total participants.

Last month, CMS announced that the Pioneer Program was able to yield total program savings of $96 million in its second year and resulted in ACOs sharing in savings of $68 million. CMS also reported that the Pioneers were able to improve mean quality scores by 19 percent and increased performance on 28 of 33 measures between performance year one and performance year two.

Financial Results

The latest financial results provide more participant-level data and allow for a new level of analysis of performance across all these ACOs. In year one of the program, financial performance for individual Pioneers ranged from a gross loss of $9.31 million to a gross savings of $23.34 million. Thirteen Pioneers reduced costs enough to qualify for shared savings, with an average of $5.85 million returned to the ACOs, ranging from $1.00 million to $14.00 million. One ACO owed shared losses of $2.55 million. The remaining eighteen ACOs were within the minimum savings or loss rate and did not earn shared savings or owe money to Medicare due to losses.

Following year one, nine Pioneer ACOs either left the Medicare ACO program entirely, or moved to the lower risk Medicare Shared Savings Program (MSSP). Eight of the nine Pioneers that left the program failed to reduce spending in their first year. Out of the remaining 23 participants in the second performance year, three of these ACOs opted to defer reconciliation until the end of Performance Year 3. The 20 Pioneers with final Performance Year 2 data had financial performance ranging from a gross savings of $24.59 million to gross losses of $6.26 million. Fourteen ACOs reduced spending in Performance Year 2, eleven of which reduced enough to qualify for shared savings. The average shared savings for these ACOs was $6.55 million, ranging from $1.22 million to $13.41 million. Three Pioneers shared losses, averaging $2.33 million back to the Medicare program.

The table below shows the breakdown of ACOs according to whether they reduced spending, increased spending, shared in savings, or owed money back to Medicare due to losses. More than half of the Pioneers were able to reduce spending in year one (18/32) and year two (14/23), with more than one-third of total ACOs earning shared savings in each year as well.

The data also suggest that those ACOs that were most successful in reducing spending in the first year were also more likely to reduce spending in their second year. As the chart below shows, three ACOs that earned shared savings in year one owed money back to Medicare due to losses in year two, while no ACO that had shared losses in year one was able to attain shared savings in year two.  

Quality Results

CMS also released ACO-level performance on all 33 measures for Pioneer participants in year one and year two. The 23 ACOs that remain in the Pioneer Program showed overall improvement in average quality scores from the first to second performance year. The ACOs also improved overall on 28 of 33 measures, as the chart below shows.

The quality domain with the greatest improvement in year two was Domain 4 (At Risk-Populations) which saw an overall improvement from 67.5% to 83%. The marked improvement in this domain suggests that ACOs are making progress at better coordinating and delivery care for high-risk patients, many of whom have multiple chronic conditions. Chronic care management for conditions such as diabetes, coronary artery disease, and hypertension is critical for the continued success of accountable care efforts. All other domains saw average quality improvement as well, summarized below.

Likewise, almost all of the individual Pioneer ACOs improved their performance on quality measures from year one to year two. Of the ACOs that remained in the program for year two, all but one ACO was able to improve its overall quality score in its second year.

Additionally, the percentage of Pioneer ACOs performing in the 80^th or 90^th percentile in quality scores also increased from year one to year two, as shown in the chart below.

Putting Together Financial and Quality Results

In year one of the Pioneer Program there appeared to be no direct correlation between average quality scores and gross savings or losses for individual ACOs. This may not be unexpected, especially since Pioneer ACOs in their first year are eligible for shared savings simply by reporting their quality. In subsequent years, however, the ACO’s quality score impacts the level of shared savings that the Pioneers are eligible to receive, so we might expect a bit more alignment between quality and financial performance. Average quality scores and level of savings or losses for each of the 32 first year Pioneer ACOs is below.

After year two, there still does not appear to be a direct relationship between higher quality scores and level of savings or losses in the Pioneer Program. Further examination of results begs additional questions about why certain ACOs clustered in different parts of the grid relative to others.

Of those ACOs in the red circle above— higher total savings and relatively average quality scores—two of the ACOs are from the Boston area and the remaining ones from other large metropolitan areas (New York City; Orange County, CA; Phoenix, AZ; and Detroit, MI). The average per capita Medicare spending for the counties corresponding to these ACOs is $11,544, compared to an average of $10,384 for counties corresponding to all 23 of the Pioneer participants.

Meanwhile those ACOs within the yellow circle had the highest quality scores, but also experience financial losses or slight savings. Many of these ACOs are from less densely populated areas, such as Maine, Wisconsin, and Illinois. There are a number of factors that could be contributing to their quality success, but little financial savings—healthier patient populations, a smaller or more engaged patient population, financial baselines impacted by lower per capita spending in these areas, or other factors driven by their region. Further analysis of these ACOs and the other public and private ACO programs, including both their characteristics and regional market characteristics, will provide needed further insights on the factors most likely to drive success.

Next Steps

These ACO-level data reflect the range of experiences across Pioneer participants. Some ACOs have sustained positive performance to date, while others have seen diminishing rates of return. Those organizations more committed to clinical transformation, patient outreach, and organizational change may be more likely to do better, but further analysis of differences in performance could enable the Pioneer Program and ACOs to achieve bigger impacts over time.

It is hard to know what the third performance year of the Pioneer program will show, but as noted earlier, the Pioneer Program has already lost over a third of its original 32 participants. Despite the decline in participation and mixed results so far, CMS remains optimistic and committed to the program, and the overall number of Medicare, Medicaid, and privately-insured individuals in ACO arrangements continues to rise. We can anticipate a proposed rule impacting the MSSP, likely later this Fall, which will impact elements of the Pioneer ACO program. Regulatory changes that may help increase the ability of the Medicare ACO programs to support better care while ensuring sustainability include: adjustments to attribution methods, benchmark calculations, collection and sharing of data with ACOs, updating performance measures, linking to other ongoing payment and delivery reforms, and creating more financial sustainability for program participants. The current Pioneer program can be a key step toward effective payment reform, but further steps are needed to assure long-term success.

Event Information

Over the past few years, more than 600 Accountable Care Organizations (ACOs) have formed across the country, charged with the dual goals of improving health while also reducing health care costs. Increasingly, evidence on how public and private ACOs are progressing toward these goals is beginning to emerge. Based on these results, major regulatory changes are anticipated in the months ahead that will impact accountable care programs in Medicare, as well as future uptake within the private sector.

On October 20, the Engelberg Center for Health Care Reform hosted a half day forum to assess the latest evidence on accountable care, discuss strategies to overcome unique ACO challenges, and provide an overview of accountable care reforms. Sean Cavanaugh of the Centers for Medicare and Medicaid Services (CMS) provided keynote remarks on the latest Medicare ACO results and potential changes to the Medicare Shared Savings Program (MSSP). Panel sessions featured leading experts in ACO research, implementation and health care policy.

 Join the conversation on Twitter using #ACOFuture or follow @BrookingsMed

Video

• The Medicare Shared Savings Program (MSSP): Looking Ahead
• Big Issues for ACOs Going Forward
• ACO Policy Issues and Solutions on the Horizon

Audio

• The State of Accountable Care: Evidence to Date and Next Steps

Transcript

• Uncorrected Transcript (.pdf)

Event Materials

• ACO Public Event full deck FINAL
• 102014_Accountable Care_Transcript

Ohio, like most other states in the country and particularly its neighbors in the Great Lakes region, is still reeling from the “Great Recession.” This economic crisis, the worst in a half century, has devastated economies across the globe.

While economists have declared that the recession has abated, it will be a long time before the businesses, households, and government treasuries across the country, and specifically in the state of Ohio, shake off the effects. And when the recession’s grip finally breaks, what will Ohio’s economy and landscape look like?

The choices that Ohio’s people and its leaders make—starting now and continuing over the next few years—will determine that answer. Ohioans can decide whether to shy away from manufacturing after the loss of so many jobs, or to transform the state’s old manufacturing strengths, derived from its role in the auto supply chain, into new products, markets, and opportunities. They can decide to opt out of the national shift to a lower-carbon economy, or to be at the forefront of developing clean coal and renewable energy industries and jobs.

They can choose a workforce system that is aligned to the true metropolitan scale of the economy and oriented to the needs of workers and employers. They can choose transformative transportation networks over more roads; smaller, greener, stronger cities; collaboration and regional cooperation to save money, reduce duplication, and bolster regional competitiveness. And instead of trying to go it alone in the 21st century global marketplace, they can maximize the federal resources on offer to support Ohio’s economic transformation and choose to compete effectively for new federal investments.

This report, Restoring Prosperity: Transforming Ohio’s Communities for the Next Economy, lays out some of the specific policy options that will help Ohioans restore the prosperity that the state enjoyed for much of the 19th and 20th centuries, but that it has been struggling to regain for at least a decade, if not longer.

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Editor’s Note: The National Perspectives on Global Leadership (NPGL) project reports on public perceptions of national leaders’ performance at important international events. This fifth installation of the NPGL Soundings provides insight on the issues facing leaders at the Seoul G-20 Summit and the coverage they received in their respective national media. Read the other commentary »

The week before the Seoul G-20 Summit was one in which the main newspapers read in Washington (The New York Times, The Washington Post and Financial Times) all focused their primary attention on the “currency war,” global imbalances, the debate on quantitative easing (QE 2), the struggle over whether there would be numerate current account targets or only words, and the US-China relationship. As early as Wednesday, November 10, The Washington Post front-page headline read: “Fed move at home trails U.S. to Seoul; Backlash from Europe; Obstacles emerge for key goals at G-20 economic summit.” By Thursday, November 11, things had gotten worse. “Deep fractures hit hopes of breakthrough; governments are unlikely to agree on a strategy to tackle economic imbalances” read the Financial Times headline on Alan Beattie’s article from Seoul. Friday, November 12, The New York Times front-page headline declared: “Obama’s Economic View is Rejected on World Stage; China, Britain and Germany Challenge U.S.; Trade Talks with Seoul Fail, Too.” By Saturday, the Financial Times concluded in its lead editorial: “G-20 show how not to run the world.”

From these reports, headlines and editorials it is clear that conflicts over policy once again dwarfed the progress on other issues and the geopolitical jockeying over the currency and imbalances issues took centre stage, weakening G-20 summits rather than strengthening them. Obama was painted as losing ground, supposedly reflecting lessening U.S. influence and failing to deliver concrete results. China, Germany and Brazil were seen to beat back the U.S. initiative to quantify targets on external imbalances. Given the effort that Korean leaders had put into achieving positive results and “consolidating” G-20 summits, it was, from this optical vantage point, disappointing, to say the least.

How was the Rebalancing Issue Dealt With?

At lower levels of visibility and intensity, however, things looked a bit different and more positive. Howard Schneider and Scott Wilson in Saturday’s edition of The Washington Post (November 13) gave a more balanced view of the outcomes. Their headline read: “G-20 nations agree to agree; Pledge to heed common rules; but economic standards have yet to be set.” They discerned progress toward new terrain that went beyond the agreement among G-20 finance ministers in October at Gyeongju, which other writers missed.

“By agreeing to set economic standards, the G-20 leaders moved into uncharted waters,” they wrote. “The deal rests on the premise that countries will take steps, possibly against their own short-term interests, if their economic policies are at odds with the wider well-being of the world economy. And leaders are committing to take such steps even before there’s an agreement on what criteria would be used to evaluate their policies.”

They continued: “In most general of terms, the statement adopted by the G-20 countries says that if the eventual guidelines identify a problem, this would ‘warrant an assessment of their nature and the root causes’ and should push countries to ‘preventive and corrective actions.’”

The Schneider-Wilson rendering went beyond the words of the communiqué to an understanding of what was going on in official channels over time to push this agenda forward in real policy, rather than declarative terms. As the Saturday, November 13, Financial Times’ editorial put it, “below the headline issues, however, the G-20 grouping is not completely impotent,” listing a number of other issues on which progress was made including International Monetary Fund (IMF) reform which the Financial Times thought might actually feed back into a stronger capacity to deal with “managing the global macroeconomy.”

The Role of President Barack Obama

Without doubt, the easy, simple, big-picture message coming out of Seoul was that Obama and the United States took a drubbing. And this did not help the G-20 either. The seeming inability of the U.S. to lead the other G-20 leaders toward an agreement in Seoul on global imbalances, the criticism of U.S. monetary easing and then, on top of it all, the inability to consummate a US-Korea trade deal, made it seem as if Obama went down swinging.

But again, below the surface of the simple, one got a different picture. Obama himself did not seem shaken or isolated at the Seoul summit by the swirl of forces around him. At his press conference, he spoke clearly and convincingly of the complexity of the task of policy coordination and the time it would take to work out the policies and the politics of adjustment.

“Naturally there’s an instinct to focus on the disagreements, otherwise these summits might not be very exciting,” he said. “In each of these successive summits we’ve made real progress,” he concluded. Tom Gjeltin, from NPR news, on the Gwen Ifyl Weekly News Roundup commented Saturday evening that the G-20 summits are different and that there is a “new pattern of leadership” emerging that is not quite there yet. Obama seems more aware of that and the time it takes for new leadership and new patterns of mutual adjustment to emerge. He may have taken a short-run hit, but he seems to have the vision it takes to connect this moment to the long-run trajectory.

Reflections on the Role of South Korea

From a U.S. vantage point, Seoul was one more stop in Asia as the president moved from India to Indonesia to Korea to Japan. It stood out, perhaps, in higher profile more as the locus of the most downbeat moments in the Asia tour, because of the combination of the apparent lack of decisive progress at the G-20 along with the needless circumstance of two presidents failing to find a path forward on something they both wanted.

From a Korean vantage point, the summit itself was an event of immense importance for Korea’s emergence on the world stage as an industrial democracy that had engineered a massive social and economic transformation in the last 50 years, culminating in being the first non-G8 country to chair the G-20 summit. No one can fault Korea’s efforts to reach significant results. However, the fact is that the Seoul Summit’s achievements, which even in the rebalancing arena were more significant than they appeared to most (see Schneider and Wilson), but included substantial progress on financial regulatory reform, international institutional reform (specifically on the IMF), on development and on global financial safety nets, were seen to be less than hoped for. This was not the legacy the Koreans were looking for, unfortunately.

Conflicts among the major players on what came to be seen as the major issue all but wiped out the serious workmanlike progress in policy channels. The leaders level interactions at G-20 summits has yet to catch up to the highly significant degree of systemic institutionalization of the policy process of the G-20 among ministers of finance, presidents of central banks, G-20 deputies and Sherpas, where the policy work really goes on. On its watch, Korea moved the agenda in the policy track forward in a myriad of significant ways. It will be left to the French and French President Nicolas Sarkozy to see if they can bring the leaders into the positive-sum game arrangements that are going on in the policy channels and raise the game level of leaders to that of G-20 senior officials.

Event Information

While the future impact of rising powers such as Brazil, Russia, India and China is uncertain and the shifting political landscape in the Arab world is still playing out, the influence of these emerging nations is a central fact of geopolitics.

Already the global financial crisis, the Copenhagen climate negotiations, and the debate over Iran sanctions have illustrated the potential, the pitfalls, and above all the centrality of the relationship between American power and the influence of these rising actors and developing democracies.

In a new paper, Senior Fellow Bruce Jones, director of the Managing Global Order Project at Brookings, argues the greatest risk lies not in a single peer competitor but in the erosion of cooperation on issues vital to U.S. interests and a stable world order. U.S. power is indispensible for that purpose but not sufficient. No longer the CEO of Free World Inc., the United States is now the largest minority shareholder in Global Order LLC.

On March 15, the Brookings Institution and Foreign Policy magazine hosted the launch of Bruce Jones’s paper "Largest Minority Shareholder in Global Order LLC: The Changing Balance of Influence and U.S. Strategy." Panelists explored the prospects for cooperation on global finance and transnational threats; the need for new investments in global economic and energy diplomacy; and the case for new crisis management tools to help de-escalate inevitable tensions with emerging powers.

Susan Glasser, editor in chief of Foreign Policy, moderated the discussion. After the presentations, panelists took audience questions.

Video

• Relative Shift in U.S. Balance of Power
• Shifting Coalitions of Consensus
• Paradox of Power for U.S.
• U.S. Needs To Get Serious about Development and Energy

Audio

• Shifting Balance of Power: Has the U.S. Become the Largest Minority Shareholder in the Global Order?

Transcript

• Uncorrected Transcript (.pdf)

Event Materials

• 20110315_global_order

The U.S. nominee for the World Bank presidency, South Korean-born physician Jim Yong Kim, is one of three candidates for the post, along with Nigerian Finance Minister Ngozi Okonjo-Iweala and former Colombian finance minister Jose Antonio Ocampo. According to Colin Bradford, the presence of several viable candidates—from different parts of the world—for the World Bank presidency means that the entire international community could have a say in selecting the next World Bank president, rather than the U.S. nominee being automatically confirmed. This change in the nominating process, says Bradford, is good for the Bank because it reflects growing demands for representation from emerging economies.
 

Video

• Change World Bank Nominating Process