CMS has now conducted three demonstrations of the “accountable care organization,” and all of them have failed. The Physician Group Practice (PGP) Demonstration, which ran from 2005 to 2010, raised Medicare costs by 1.2 percent. [1] The Pioneer ACO program, which ran from 2012 through 2016, cut Medicare spending by three- or four-tenths of a percent on average over its first four years. And the Medicare Shared Savings Program (MSSP), which began in 2012 and may lumber on indefinitely, has raised Medicare costs by two-tenths of a percent on average over its first four years.
It is way past time for CMS and health policy researchers to determine why all three ACO demos failed. In the first two installments in this three-part series I laid out one of the reasons: CMS’s method of assigning patients to ACOs guarantees ACOs must apply their magic to a rapidly changing pool of patients and doctors. In the first essay , I demonstrated that this method, which assigns patients first to doctors based on where they get the plurality of their primary care visits and then to ACOs if their doctors are in ACOs, guarantees high churn rates among doctors and patients, shunts sicker patients away from the ACOs, and assigns few ACO patients to each ACO doctor. In the second essay I reviewed the series of evidence-free decisions that led to CMS’s plurality-of-visits method. I noted that the first of these decisions was one Congress made: They instructed CMS to figure out how to assign patients to ACOs without making patients enroll in ACOs.