Medicare Announces 27 ACOs. A New Species?

I’m surprised and intrigued by Medicare’s announcement of 27 new Shared Savings model ACOs.


I had been anticipating this announcement as a defining moment for Medicare’s thrust into accountable care. My expectations had been that we would see either:

Boom — a big splash of new Medicare shared savings ACOs announced, including big name hospitals and medical groups that were starting large scale ACOs, perhaps with hundreds of thousands of patients.

Bust — no one showed up at the party. Providers would have concluded that Medicare ACOs were too risky, bureaucratic, and high effort.


What we got is something in the middle:

Will Health Plans Want to Contract with ACOs? Maybe, Maybe Not.

On the Perficient Health IT blog, Christel Kellogg writes:

I am hearing that carriers are staying away from ACOs and are not planning on partnering.  What have you heard?

This is one of those blip-on-the-radar-screen comments that jarred my attention — and it raises very important questions about industry dynamics.

First, let me expand on the issue.  As I’ve written before, there are at least two broad categories of “accountable care initiatives”:

1) Formal Accountable Care Organizations (ACOs) by which care providers contract with Medicare

2) Informal Accountable Care-Like (AC-Like) arrangements between care providers and commercial health plans.

The list of accountable care animals in the forest is likely to keep growing. For example, just this week Oregon announced details for CCOs (Coordinated Care Organizations) for Medicaid.

So how are different stakeholders likely to react to the opportunity of a formal ACO contracting with commercial health plans? Let’s look at this from a couple of different angles.

What’s the Difference Between ACOs and “AC-Like” Arrangements?

A lot. AC-Like arrangements will be MUCH simpler to create and maintain.

The health care market is moving toward accountable care. There are at least two broad paths forward:

1) Formal Accountable Care Organizations (ACOs) by which care providers contract with Medicare

2) Informal Accountable Care-Like (AC-Like) arrangements between care providers and commercial health plans

What are the differences between these routes? I see at least 5 factors at play:

  • Transaction costs
  • Timing
  • Incrementalism
  • Flexibility
  • Capital cost

HSR Study: Focus on High-Cost Medicare Beneficiaries

Following the Money: Factors Associated with the Cost of Treating High-Cost Medicare Beneficiaries. Health Services Research; February 9, 2011

Access to the full online article is currently available for free on the Center for Studying Health System Change website.

Key excerpts:

Conclusions. Health reform policies currently envisioned to improve care and lower costs may have small effects on high-cost patients who consume most resources. Instead, developing interventions tailored to improve care and lowering cost for specific types of complex and costly patients may hold greater potential for ‘‘bending the cost curve.’’

This research uses patient-level data and a much richer set of explanatory factors than previous studies to examine key patient, physician, practice, and market characteristics associated with costs of high-cost Medicare beneficiaries, defined as the top 25 percent of beneficiaries arrayed by expected Medicare costs… we estimate determinants of Medicare expenditures (costs) at the beneficiary level….After exclusions, the analysis sample comprised approximately 1.6 million beneficiaries.

MGH Medicare Disease/Care Management Demo Shows Home Run Results!

Medicare has (finally) recently released a report showing home run results for a disease/care management demonstration project!

Evaluation of Medicare Care Management for High Cost Beneficiaries (CMHCB) Demonstration: Massachusetts General Hospital and Massachusetts General Physicians Organization (MGH)

Remind Me Again About the CMHCB Medicare Demo…

The CMHCB started in 2005. My recollection is that the demo requirements were extremely similar to the Medicare Health Support (MHS) project, with a few exceptions: 1) Applicants had to include direct care providers (delivery systems, physicians) in their program design, 2) patient populations were significantly smaller than MHS.  Please comment on anything I’m missing.

I’ve included an addendum at the bottom providing more info about this little known and not widely discussed Medicare demo.

…and what was the MGH CMP project for the CMHCB?

Is “CMS Innovation Center” an Oxymoron?

A press release earlier this week announced the new CMS Center for Medicare and Medicaid Innovation.

If you went to their Twitter feed today, here’s what you’d see:



This struck me as a great pictorial representation of the broader challenges the CMS Innovation Center faces:

  • They’ve kinda sorta figured out there’s a conversation going on out there — they’ve joined Twitter
  • They haven’t figured out that they need to listen:  Following = 0
  • They haven’t figured out they they need to talk:  Tweets = 0

I remain hopeful, but the CMS Innovation Center has a long way to go.  Dr. Berwick, opening up this closed organization is going to be the challenge of your lifetime.

Pilots, Demonstrations & Innovation in the PPACA Healthcare Reform Legislation

Here’s a bit of trivia that will make you the hit of the next cocktail party you attend.  How many times are the words “demonstration” and “pilot” mentioned in the newly passed Federal healthcare reform legislation — the Patient Protection and Affordable Care Act (PPACA)?


  • “demonstration” — 312 mentions
  • “pilot” — 80 mentions

This weekend I’ve been trying to wrap my head around the question “Just what are these demos and pilots in the PPACA all about?” I have been boggled by the sheer number and complexity, and thought I’d share some findings from my first dive.

Why are These Pilots and Demonstrations Important?

Is Gawande Right? Are Pilot Programs the Key to Delivery System Cost Reductions?

Atul Gawande’s most recent New Yorker article “Testing, Testing” addresses the critics who lament that there is no master plan to curb delivery system costs in pending health reform legislation.

Gawande retorts: “Is that a bad thing?”

…and he answers his own question by describing the value of pilot programs contained in both the Senate and House versions of health reform legislation.

Is Gawande correct?  Yes and no….

Medicare Extends PHR Pilot — Big Mistake!


Medicare announced today that it is extending its Personal Health Record (PHR) pilot project for residents of Utah and Arizona.

This is a waste of time and taxpayer dollars. Those of you who read my blog know that I’m a big fan of PHRs, but you have to know when you’re backing the wrong approach.

What’s wrong with this pilot project? A lot:

The Real Secret Sauce of Medicare’s Participation in Regional Collaboratives — Network Effects

Last week I asked whether Medicare’s Biggest Change in 40 Years is on the horizon. That post described and discussed implications of Medicare’s new direction for the medical home — the shelving of Medicare Medical Home Demonstration (MMHD) and the refocusing on the recently announced Multi-Payer Advanced Primary Care Initiative (MAPCI).

In that post I touched briefly on the potential for MAPCI to create effective networks at multiple levels — contracting networks, health IT networks, social and collaborative care networks.  I’d like to expand a bit today…

So, why is Medicare’s participation in MAPCI  and other regional collaboratives such a big deal? Here’s my hypothesis:

Medicare’s non-participation (to-date) in regional payer/provider collaboratives has been a rate limiting factor in the potential to achieve high levels of network effects that drive adoption.