The accountable care organization (ACO) model of delivering value-based care has generally proven successful at lowering costs and improving quality. But this alternative payment model must be improved to fulfill its promise of promoting greater health equity.
Medicare’s largest alternative payment model is the Medicare Shared Savings Program, an ACO model that served 10.6 million seniors in 2020. Collectively, 513 ACOs participated in the voluntary program, saving Medicare a total of $4.1 billion in 2020. Across all participating ACOs, the average quality score was 97.8% and 60 ACOs earned a perfect score of 100%.
ACOs also demonstrated their value during the COVID-19 pandemic. Given their accountability to long-term patient care and outcomes, ACOs were proactive in their outreach to high-risk patients to keep them healthy, established telehealth and remote monitoring capabilities to continue to provide care, and effectively managed home visits and post-acute care to reduce COVID transmission, according to the National Association of Accountable Care Organizations (NAACOS).
Despite this success, a critical question has loomed: Are the savings that ACOs generate a product of the model itself, or a result of selective enrollment in the form of excluding the most challenging patients?
A new focus on health equity
To ease concerns about selective enrollment and demonstrate a new and greater emphasis on health equity, the Centers for Medicare & Medicaid Services (CMS) recently announced a redesign of the ACO model. The new ACO Realizing Equity, Access, and Community Health (REACH) Model is intended to promote greater equity in the delivery of high-quality healthcare services, and to extend its reach into underserved communities to improve access to services, according to CMS.
It is important to note what we mean by “health equity.” The Robert Wood Johnson Foundation produced the following definition: “Health equity means that everyone has a fair and just opportunity to be as healthy as possible. This requires removing obstacles to health such as poverty, discrimination, and their consequences, including powerlessness and lack of access to good jobs with fair pay, quality education and housing, safe environments, and healthcare.”
For its part, CMS has developed six health equity priorities for reducing health disparities in its programs. Related to ACOs, two priorities are especially noteworthy:
- Evaluating disparities and integrating solutions across CMS programs
- Developing and disseminating promising approaches to reduce health disparities
The missing piece: better equity through home care
One significant challenge facing ACOs – and all providers – is that funding is lacking in the U.S. to address the social causes of health inequities and Social Determinants of Health (SDoH). In contrast, several European countries have combined funding for health and social services and created incentives for communities and organizations to address both areas collectively.
Nonetheless, CMS’ new focus on health equity has presented ACOs with a unique opportunity to address patients’ health and social needs. Although the REACH model is well-intended and moves ACOs closer to a place of delivering better health equity, three additional changes are needed to be truly effective in accomplishing this important goal:
- Eliminate selectivity in ACO models. This can be done by not eliminating Tax Identification Numbers (TINs) to reduce risk within an ACO. Some ACOs have eliminated TINs that include high-risk populations to improve financial performance.
- Fund social programs. ACOs can be incentivized to address social issues that affect health equity, such as nutrition and housing, by providing them with the funding to do so. Successfully addressing patients’ SDoH has the potential to greatly reduce the cost of care for populations that are impacted by these issues.
- Support home care and telemedicine. Many SDoH issues can be assessed, identified, and addressed in patients’ homes, enabling greater convenience and time savings for patients at a lower cost. By accessing telemedicine and in-home care, ACOs can begin to address some common SDoH inequities, such as barriers to healthcare and transportation. By better identifying and addressing patients’ social needs, providers can reduce avoidable patient stays and readmissions while reducing total costs.
Given the long-standing disparities in the U.S. health system that were further exposed by the pandemic, promoting greater health equity should continue to be a high priority for ACOs, payers, regulators, and the industry as a whole. By eliminating ACO participant selectivity, providing adequate funding, and supporting in-home care and services, ACOs can help people overcome health equity barriers that have been decades in the making.
Joe Damore
Joe Damore, LFACHE is CEO of Damore Health Advisors (DamoreHealth.com). A seasoned healthcare executive, Damore has extensive experience leading and assisting organizations in successfully transitioning to value-based care and payment models. He is a former vice president of strategy, innovation, and population health at Premier Performance Partners, and was CEO at both Mission Health System in Asheville, N.C., and Sparrow Health System in Lansing, Mich., for 20 years.
Ashish V. Shah
Ashish V. Shah is CEO of Dina (dinacare.com) and leads the Dina team on its mission to power the healthcare industry’s transition to virtual and in-home care. He founded the company in 2015 and remains passionate about empowering care teams with the tools they need to help people age in place. A recognized thought leader, Shah previously served as CTO at Medicity, the market leader for vendor-neutral Health Information Exchange solutions.
