Accountable Care Organizations Now Serve 14% of Americans

New research by Oliver Wyman finds an increase of 40 percent since August 2012

NEW YORK--()--More than half of the U.S. population now live in localities served by accountable care organizations and almost 30 percent live in areas served by two or more.

The figures come from a new analysis by the consulting firm Oliver Wyman, based on the Department of Health and Human Services’ announcement of the latest class of Accountable Care Organizations (ACOs) approved to participate in Medicare’s ACO programs. The latest round of approvals in January brings the total of Medicare ACOs to 259, up from 154 this past summer. The new additions contribute to a sharply rising potential level of influence for ACOs.

  • According to the Centers for Medicare and Medicaid Services (CMS), about 4 million Medicare beneficiaries, or about 11 percent of total Medicare fee-for-service beneficiaries, will now receive their healthcare from ACOs. The corresponding figures in September were 2.4 million and 6 percent.
  • Most of these Medicare ACOs also serve non-Medicare patients and are moving toward serving all their patients under ACO arrangements. That transition can take as long as four to five years. That said, the current number of patients served by the newly approved Medicare ACOs (including both patients currently under an ACO arrangement and those served through traditional contracts with payers) has risen by about 12 million, bringing the total number of patients served by Medicare-approved ACOs to 29 million.
  • The total number of patients in organizations with ACO arrangements with at least one payer—both Medicare and non-Medicare—is now between 37 and 43 million, up from 25 to 31 million—or roughly 14 percent of the population.

“It’s hard to know precisely how many people served by ACOs are currently cared for under true fee-for-value contracts,” says Rick Weil, a partner in Oliver Wyman’s Health & Life Sciences practice group who has worked extensively in creating ACOs. “Most ACOs today are still mixed models, with some patients being served through ACO-style or capitated contracts and some through more traditional fee-for-service contracts. It can take several years to shift an entire population from one model to another. But that total number of patients served by these mixed organizations is still important.”

“For many people receiving care from one of these mixed-model ACOs, the shift to full participation in value-based care will be gradual and subtle as the contracts between the ACO and their insurance company migrate to ACO-style contracts. Over time, patients should notice that care gets more convenient, more proactive, and more effective.”

“The ingredient that’s been missing in healthcare for too long is real competition on value,” says Niyum Gandhi, associate partner. “With the latest additions, more than half of the population—52 percent—live in Primary Care Service Areas served by ACOs, up from 45 percent this past August. The competition between ACO-based healthcare providers and traditional fee-for-service providers should give reform a good push forward. But even more powerful will be the competition between ACOs, which will give them the incentive to evolve as quickly as possible. And we estimate that at least 28 percent of the population now live in communities with two or more ACOs, up from 17 percent. That’s a remarkable development and—for patients, ultimately--a hopeful one.”

About Oliver Wyman

Oliver Wyman is a global leader in management consulting. With offices in 50+ cities across 25 countries, Oliver Wyman combines deep industry knowledge with specialized expertise in strategy, operations, risk management, and organization transformation. The firm's 3,000 professionals help clients optimize their business, improve their operations and risk profile, and accelerate their organizational performance to seize the most attractive opportunities. Oliver Wyman is a wholly owned subsidiary of Marsh & McLennan Companies [NYSE: MMC]. For more information, visit www.oliverwyman.com. Follow Oliver Wyman on Twitter @OliverWyman.

Contacts

Oliver Wyman
Patrick Clinton, 212-345-3013
patrick.clinton@oliverwyman.com

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Contacts

Oliver Wyman
Patrick Clinton, 212-345-3013
patrick.clinton@oliverwyman.com