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ACO Explosion

By Gregg A. Masters, MPH

On ‘This Week in Accountable Care‘, Wednesday, September 5th, 2012 at noon Pacific and 3PM Eastern, my special guest is industry veteran William J. DeMarco, President and CEO of Pendulum Health.

Active since the roll-out of the HMO Act, and instrumental in the development of marquee names and properties in the managed healthcare market, including United Health Group and others, DeMarco remains one of the clearer and thoughtful voices in the healthcare policy and implementation dance.

This is DeMarco’s second appearance on This Week in Accountable Care, for some of his previous thoughts, click here.

In anticipation of our chat, DeMarco provided a draft release of Pendulum Health’s September Newsletter intended as both a client update and general industry developments tracking piece. We are privileged to include portions of that release below. The stats speak for themselves and are nothing short of remarkable and historically unprecedented. I will summarize and provide context via the Tweets posted this morning in anticipation of our chat and invite your to read the balance of DeMarco’s update in its entirety:

@2healthguru We’ll discuss key developments on the demand side of ACO development & launch with DeMarco at noon PT

@2healthguru: Whoa! ‘Over 400 applications for new ACOs are in process’ given 9.6.12 deadline. According to William J. DeMarco

@2healthguru ‘Most [are] physician owned medical groups, while several are IPAs’ DeMarco

@2healthguru: ‘…a 600% growth rate in ACOs since November of last year…’ DeMarco

@2healthguru: ‘….20% of Medicare beneficiaries…will be connected to Medicare through their ACO by 1.1.13..’ DeMarco

@2healthguru: ‘[add] Medicare Advantage beneficiaries [27%]…a factual statement…[ACO share will approach] 50% of Medicare population.’

@2healthguru: ummm, lemme see. 50% share shift since [delayed] launch in 2012. Am I really smart to sit on sidelines?

The complete newsletter entry detailing the basis for the ‘ACO Explosion’ headline is posted below:

Medicare Shared Savings

Feasibility studies for three ACOs in North Carolina, a medical group in Arizona, a physician alliance in Illinois, a hospital system in Indiana and consultation with several Pioneer Plans has kept us very busy over the last several months. Most of these are physician owned medical groups, while several are IPAs with medical homes who want to collaborate with one another to form the primary care base of a Medicare Shared Savings ACO.

Over 400 applications for new ACOs are in process and due to CMS by September 6th. Add to this the several hundred earlier ACOs approved in April and June of this year and it becomes clear that the 600% growth rate in ACOs since November of last year when final rules were published brings excitement to the marketplace.

This easily represents 20% of Medicare beneficiaries who will be connected to Medicare through their ACO by January 1, 2013. When adding the Medicare Advantage beneficiaries that represent 27% of the Medicare population and growing, it is a factual statement to say that 50% of all Medicare beneficiaries will be receiving their benefits through Medicare contractors instead of Medicare directly. These contractors are all being held accountable by CMS to follow stringent guidelines including patient satisfaction.

This means Medicare has been permanently changed by focusing on shares savings for improving quality instead of merely paying claims. We anticipate ACO mergers and acquisitions will be the next step as investors and hospitals catch up to the opportunity to invest in the new chronic care business model.

We are excited for the plans with whom we have worked, and their enthusiasm and innovation encourages us to expand our own resources and capabilities to serve this emerging transformation of the local delivery system.

William J. DeMarco MA CMC is the President & Chief Executive Officer of Pendulum Health Development Corporation., a national, independent healthcare consulting firm specializing in healthcare delivery system redesign and transformation. For more information, click here.

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