- Universal American, the largest operator of accountable care organizations in the nation, has exited three ACOs. Executives say the company will continue to drop more poorly-performing or unprofitable organizations.
- CFO Robert Waegelein said that Universal American will not be expanding its ACO involvement in new markets in January (when CMS adds another group of organizations to its Medicare Shared Savings Program).
- Despite scaling back, however, the company will not be abandoning the model, according to CEO Richard Barasch. The insurer still operates 30 ACOs after these exits and the merger of two other ACOs.
The insurer moved early and aggressively into the new ACO model, and this pullback was announced in May. Since 2012, the company has used data analytics and case management to identify struggling ACOs and those that are worth the investment.
"We are continuing to reduce the size and scope of our investments to focus on those ACOs where the [shared-savings] program can work and we can truly impact the cost and quality of medical care," Barasch told Modern Healthcare.
This is partially because the ACO experiment can be an expensive one: Through last December, ACO expenses for Universal American totaled $63 million. The company reported a net loss of almost $10 million on $519 million in revenue during Q2, although operating costs for its ACO division fell to $10 million from $13.1 million in Q1.
As to whether more unprofitable ACOs might lose their funding, that remains to be seen:
"I don't know if it's a trend, but it's interesting," Jeff Hoffman, senior partner at Kurt Salmon, told Healthcare Dive in May. "This is just part of the evolution of the ACO model."
Want to read more? You might enjoy this story about how Universal American exposed Medicare ACOs' biggest flaw.