Following Medicare’s ACO Program Overhaul, Most ACOs Stay—But Physician-Led ACOs Leave At A Higher Rate

Accountable care organizations (ACOs) have become a major payment and delivery reform since they were introduced as a key component of the Affordable Care Act. Currently, there are more than 1,000 ACOs covering about 33 million lives across all payers—numbers that have steadily increased over time. The ACO model continues to evolve, but it seems to be here to stay. In late 2018, the Centers for Medicare and Medicaid Services (CMS) released its Pathways to Success rule, overhauling its largest ACO program, the Medicare Shared Savings Program (MSSP). On February 12, 2019, CMS released the list of ACOs participating in the 2019 MSSP, allowing us to see who remained through the program’s sixth year (2018) and to conduct early analysis of the impact of Pathways to Success on ACO participation. From these analyses, we highlight two key findings:

• Hospital-led ACOs and large ACOs regardless of type have low dropout rates at the end of 2018. One of the goals of the program overhaul was to move larger organizations into downside risk contracts. Our early look at new dropouts suggests the rule is not driving large ACOs out of the program, and they are therefore committed to moving to more downside risk.
• The ACO dropout rate increased modestly at the end of 2018, in contrast to the two previous years. Overall, dropout rates are similar between ACOs expected to have high- and low-revenue status, which carry different associated requirements for downside risk. Physician-led ACOs have higher dropout rates than hospital-led ACOs—as was true at the end of every program year except 2017. In particular, despite new policies favoring low-revenue ACOs, small physician-led ACOs have the highest dropout rate of all ACOs at the end of 2018.