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Each week, Health Affairs' Rob Lott brings you in-depth conversations with leading researchers and influencers shaping the big ideas in health policy and the health care industry.
A Health Podyssey goes beyond the pages of the health policy journal Health Affairs to tell stories behind the research and share policy implications. Learn how academics and economists frame their research questions and journey to the intersection of health, health care, and policy. Health policy nerds rejoice! This podcast is for you.
Friends, before we get to this week's paper, a quick programming note. This will be our last episode before we take a month long summer sabbatical. We'll be off for all of July, and we'll be back out there with new episodes, new research, new brilliant authors beginning again in August. So let me say thanks for a great first half of twenty twenty six, and here's wishing you all a happy Independence Day and a happy birthday, Shuli. But first, let's do this one more time.
Rob Lott:Let's talk about accountable care organizations, one of the biggest bets that national policymakers have placed over the last two decades. The goal, of course, of ACOs is to slow cost growth and improve care by incentivizing groups of clinicians and organizations to take collective responsibility for total cost of care. Organizations earn bonuses when average spending for their beneficiaries falls below a financial benchmark. As our guest today describes, ACOs were, quote, originally conceived as local clinically integrated networks of physicians and hospitals that collaboratively care for shared patients, close quote. But a funny thing has happened over the last fifteen years with the Medicare shared savings program.
Rob Lott:That's Medicare's flagship ACO model. We started seeing ACOs made up of clinicians and systems from all over the country. The thing that connects these disparate providers is not that they're based in Chicago or Billings, Montana or the Blue Ridge Mountains. Rather, they are being brought together by third party firms commonly referred to as conveners. Now what to make of these conveners?
Rob Lott:On one hand, they manage the administrative and technological demands that might otherwise prevent many practices, especially small independent practices from participating in an ACO at all. On the other hand, it's not exactly consistent with policymakers' original vision and intention for the program. Now change like this, after all, can be good. It can be bad. But either way, it tends to make people nervous and uncertain.
Rob Lott:But here we are, nerves and all. So for our podcast today, let's embrace the uncertainty and see if we can learn a little more about these conveners and the road ahead. I'm here with doctor Adam A Markovitz, an assistant professor of general internal medicine and a practicing general internist at the University of Michigan. Together with colleagues, he has a new paper in the June issue of Health Affairs, studying and describing, quote, third party convener firms and the rise of geographically dispersed, High Earning Medicare ACOs. This is a really interesting paper on a relatively undercovered topic, and I really can't wait to dig in.
Rob Lott:Doctor. Adam Markovitz, welcome to A Health Podyssey.
Adam Markovitz:Thank you so much for having me. It's really a pleasure to be here.
Rob Lott:Well, why don't we start with a little bit of history? When the ACO model and the Medicare Shared Savings Program in particular were first developed, Do you have a sense, did policymakers expect the rise of third party conveners? Did they foresee this? And if not, why not?
Adam Markovitz:I don't I don't think so. I think when ACOs were were first being developed, I don't think policymakers really foresaw the rise of these third party convener firms. And, you know, I think to think about why I I think you really have to, like, go back to where this idea originally came from. So ACO is really traced to Elliot Fisher and his colleagues at Dartmouth, who first published a paper, honestly, health affairs, I guess, nearly twenty years ago called Creating Accountable Care Organizations, the extended hospital staff. And, you know, at that time, I think the vision was really like a local, clinically integrated network of physicians in hospitals that were collaboratively caring for the patients that they actually share.
Adam Markovitz:So, you know, essentially a virtual delivery system where they could manage the complex needs of their patients. And, you know, to put that in context, know, the underlying problem we're all wrestling with is fee for service. We worry that it pays for volume, not value. And Medicare's first big answer to this was Medicare Advantage. Hand a fixed capitated budget to private insurers, and they can basically figure out the spending.
Adam Markovitz:And ACOs at the same time are really traditional Medicare's answer to MA. You know, we still want to move off of pure fee for service, get away from these problematic incentives for volume. But unlike Medicare Advantage, we wanted those decisions to sit with doctors, not private insurers. You know, I think the rationale, thinking is that doctors are closer to patients, that they have an ethical obligation to do the right thing so that they can deliver better care at lower cost. So, you know, the whole premise of ACOs is in some sense to replace the insurer with the physician.
Adam Markovitz:But this assumes that ACOs can replace insurers with doctors, which means that we actually have to require that doctors act like insurers, optimize networks, navigate complex rules, bear actuarial risk. And those are functions that like health payers handle centrally all the time, every day and at scale. But most practices, especially smaller and independent ones just aren't built for for them. They don't have the infrastructure, the experience, the financial reserves. I I'm a primary care physician.
Adam Markovitz:I'm a health policy researcher who studies this, I wouldn't have any idea how to build and run an ACO on my own. So instead of market emerged to do just that. And I think that's that's really where the ECO conveners come in. So, you know, in hindsight, it should have been obvious that if CMS creates some super complicated set of rules for how ACOs are run, how benchmarks are set, that some third party firms would rush to fill this void and help providers participate. But no, I I don't think we really anticipated this.
Adam Markovitz:Certainly, this the issues of selection, were certainly somewhat foreseeable at the time. People warned about how benchmarks could be gamed. A lot of thought went into historical benchmarks versus regional benchmarks. How much should we risk adjust. But I don't think we really foresaw that there'd be this whole class of third party firms that would become the vehicle for, addressing this.
Adam Markovitz:And, you know, I think that the tell here is that fifteen years in, CMS still doesn't have any published formal records of these convener relationships.
Rob Lott:Okay. So fast forward fifteen years, as you said. Here we are. You're about to set out on this study that we're gonna talk about today. Did you have a theory before you conducted the research about how the presence of third party conveners in this ecosystem might affect the ecosystem itself?
Adam Markovitz:You know, honestly, like like most researchers, I I don't I hadn't given conveners a whole lot of thought going into this work. I was certainly aware of some of the big ones, Caravan, Aledade. I'd seen their publicity on social media. I'd seen some talks given, but I I didn't really have a clear sense of how much involvement they actually had in the program or what their ACOs would really look like. If anything, I sort of vaguely assumed they would be doing the obvious good thing that they advertised, you know, organizing small, local, independent practices into ACOs.
Adam Markovitz:And then one day, I was going through the the CMS's public use files as as one does in their free time as one does. And and I noticed something. Like, there's this column in the public use file where it states which states ACOs operate in. And, you know, while a lot of them were just in one state, two state, maybe three states, some of them were spread across five, ten, 15 states, sometimes in totally different parts of the country. And that just didn't make any sense to me.
Adam Markovitz:Like, why would an ACO be organized that way? The whole idea is local doctors courting care for shared patients. I will say on the other hand, I'd spent a lot of time during my PhD dissertation evaluating the MSSP, And one of the things I'd found and published both in health fairs and annals of internal medicine was evidence of selection bias, with ACOs appearing to recruit low cost clinicians, and that a lot of what looks like savings in the program was really that selection of low cost doctors. So I think putting together these two findings, you know, I did start to wonder whether or not these super geographically dispersed ACOs were, you know, essentially like a fingerprint for some of that selective recruitment, but just done on a nationwide scale that I would not have appreciated otherwise. And then the question is, these conveners partly the ones enabling it?
Adam Markovitz:Because frankly, a lot of what they're hired to do is to recruit and aggregate clinicians in the ACOs. So I think that was definitely a hunch. But, know, I did wanna hold on to both possibilities because I do think there's, you know, there's the good story that conveners really do enable participation. They bring this capital, the analytics, the care management, to small practices that could never do this on their own. And then there's the bad story that they're essentially engaging, sort of in arbitrage, aggregating low cost clinicians across the country to beat these benchmarks.
Adam Markovitz:And so I would probably say my prior was that it's probably both. You know? There's probably some good and bad. And honestly, that's probably how I still still feel about it having performed this study.
Rob Lott:A a little from column a and a little from column b. And so let's dig into what you found when you conducted the research. You looked at national data from 2012 to 2021 and examined trends in conveners involvement over time. You also looked at how geographically dispersed they were compared to non convener ACOs, and then you looked at those associations with shared savings. So tell us what you found.
Adam Markovitz:Yeah. So using those national data, I I think there were really three central findings that we had, you know, bearing in mind this is from 2012 through 2021 in the MSSP. So first, these conveners grew from 11 to at least 23% of ACO beneficiaries in the program. Second, these networks became gradually more geographically dispersed over time, particularly among these convener run ACOs. So among the convener run ACOs, these dispersed ACOs went from nine to 45% of beneficiaries versus from one to 8% among nonconvener ACOs.
Adam Markovitz:And meanwhile, these, you know, local sort of single community ACOs nearly vanished going from 20% down to 4% by 2021. And then the third finding was was about the money, about the bonuses. So when you look at the shared savings bonuses, it really was the dispersed convener ECOs that earned the most by by really a wide margin, earning about a $171 per beneficiary per year, while the local convener ACOs earned the least around $95 And I think the key contrast though is that among the non convener ACOs, that gap between the dispersed and the locally, the local ACOs basically disappeared and was not significant. So really, it it was it wasn't just a convener effect. There is something specific to the dispersed convener ECOs that seem particularly good for earning bonuses.
Rob Lott:So there are conveners that are operating more locally less less dispersed. Is that right? And those struggled as well. Or or perhaps let let's not say struggled. They didn't thrive quite as much as the more dispersed ones.
Rob Lott:Is that fair?
Adam Markovitz:Correct. Yes. Exactly.
Rob Lott:I wanna ask a little more about the details and perhaps some of our the possible mechanisms that might be driving these differences. But first, let's take a quick break. And we're back. I'm here with doctor Adam Markovitz, talking about the rise of third party convener firms and, geographically dispersed high earning Medicare ACOs. So you just told us about some of the findings and the fact that those most geographically dispersed third party convened ACOs were doing really well in terms of earning shared savings.
Rob Lott:And I guess one way to look at that is that, you know, they've found the trick and the other way is to say that they're really good at what they do. And so I'm wondering, you know, how you think about the mechanisms that might be explaining why dispersed convener affiliated ACOs earned the highest shared savings.
Adam Markovitz:Yeah. It's a great question. You know, and I wanna be careful here. So this is descriptive study. It's not a causal one.
Adam Markovitz:And second, the mechanisms I'm about to describe are not mutually exclusive and some elements of each of them could be true. So I think the first mechanism is the good story and it's the story the conveners themselves tell, that they genuinely improve care, better analytics, better care management, better quality of care, and that's how they lower spending. And to at least get at that, we looked at whether these dispersed conveners actually had the highest quality performance in the MSSP, but we didn't see that. So the dispersed convener ACOs scored no better on overall quality metrics than the local ECOs or the non convener ACOs. So they may have been delivering better care, but didn't show up in sort of those aggregate quality measures.
Adam Markovitz:The second is actually reverse causality. So it's just simply basically the best ACOs that succeed and then they expand over time. They grow into new markets and then they look dispersed. And in that story, dispersion is really a marker of success and not a cause of it. And because ours was a cross sectional study, that certainly is a real possibility that that may be driving some of our findings.
Adam Markovitz:And then the third story I think is is the bad one of strategic selection. So that's where conveners are deliberately constructing networks to beat spending benchmarks, cherry picking low cost clinicians from across the country, regardless of whether or not those clinicians share any patients or are actually doing anything to subsequently reduce spending. And, you know, while the convener firms are not advertising this, there is a huge cottage industry of ACO consultants, ACO actuaries whose entire job it is to do exactly this, and they are not subtle about it. So I think the clearest example is a tool called, Milliman's ACO Builder, which is essentially a tool for cherry picking low cost doctors. So they went out, bought Medicare claims data on every physician nationwide, mapped out who's high cost and who's low cost, and then they sell you that map so that you can just grab the low cost ones and build your network, to be, like as they send their website, structured for maximum performance and shared savings.
Adam Markovitz:So to test whether or not that was happening, we basically built our own ACO builder, but in reverse. So we took each ACO's patients and asked a simple question. How does their spending compared to other patients in the same county? Because that's the regional benchmark. And if you've recruited low cost clinicians, your patients should look unusually cheap relative to their local peers.
Adam Markovitz:And that's exactly what we found. So the dispersed convener ACOs had the lowest spending relative to the region of any group, roughly $400 below the regional benchmark. While the dispersed non convener ACOs had the highest, only about $100 below. And again, this is cross sectional, so this could also reflect subsequent savings that the ACOs did, generate. But, you know, one thing to note is, like, the firm selling tools like ACO Builder, they're not even in our study.
Adam Markovitz:So we could only identify sort of the formal conveners who actually run ACOs and list themselves as, the ECO executive or the public contact for the ACO in the public files. But there's this entire layer of analytic consultants that's essentially invisible to us researchers and I think to CMS. And these consultants are not coy about what they're doing. So in that sense, I think our paper is to some extent the tip of the iceberg. But once you start looking for it, it's really everywhere.
Adam Markovitz:And I think most of us, so I will say as an academic researcher, I speak with policymakers, I think most people still picture ECOs as like these local ECOs who are not sophisticated enough to cherry pick or gain benchmarks like this. And honestly, I don't think a lot of them are, but you don't you don't have to be. You don't need your hospital's head of pop health to know how to do this. You just need them to know someone who does and hire them. And I do think that's exactly what they're doing.
Adam Markovitz:Like, you spend ten minutes on LinkedIn, as I do now, it's wall to wall consultants, actuaries advertising the software, hosting webinars on you know, there's a new ACO lead program. And, like, every day, people are posting about, you know, how you should structure your ACO for maximal savings. So I think there is this whole industry that is hiding in plain sight. It's just not the mental model that we as researchers have been bringing to these programs.
Rob Lott:Remind me to connect with you on LinkedIn after this conversation.
Adam Markovitz:Would be a So
Rob Lott:your findings highlight this tension, right? That's what we're talking about here today between sort of the benefit of increased participation made possible by third party conveners versus maybe this potential undermining of the program when bonuses are achieved through network optimization in theory as opposed to actual coordination and quality improvements. And I'm curious, you alluded to some of the entities in this ecosystem being invisible to CMS. Do you have a sense of to what extent all of this is on CMS's radar and how the agency has navigated this tension as it's made changes to various ACO models over the years?
Adam Markovitz:Yeah. And I think that's exactly the right way to frame it because it it is a real tension. Know? So the same firms that do lower the barrier to entry for, like, these small practices and make it easier to really, you know, improve quality and lower spending, they're also the same firms that make it easiest to win without doing anything. I do think this is definitely on CMS' radar.
Adam Markovitz:You can, I think, read it right off of some of the recent ACO design choices? So, like, for instance, just thinking about ACO REACH, so that's the the ACO model that LEED is now replacing in this coming year. So REACH really was CMS' push, sort of like in the convener sense, it was their push to try to reach these small and rural practices that MSSP had left behind. It even opened the door for private firms to directly contract with CMS for the first time in traditional Medicare. There's not been much empirical work on REACH yet, but our own preliminary data show that REACH ACOs are doing some of the same things we found in MSSP, selecting these low cost clinicians.
Adam Markovitz:And with the lead, you read some of the design choices, I think, as a direct response to some of those concerns. So I, again, in my free time as one does, I've read through large portions of the RFA, And now they actually ask they have a a question about who runs your ACO, and there is a checkbox for conveners. I've not looked through MSSP's RFA, so maybe they did did before, but to me that was noteworthy. And in terms of how LEED is designed to curb selection, they are now starting ACOs on a pure historical benchmark rather than a regional one. So you're measured against your own past instead of being rewarded simply by finding cheap clinicians relative to their local peers.
Adam Markovitz:And also like in MSSP but not in REACH, they require the whole practice to participate. So unlike in REACH, you can't sort of cherry pick individual low cost doctors. And then they actually, in their RFA, explicitly ban conveners from tin swapping, which means where you basically shuffle the same practice between your ACO. So they say that if a practice is in an ACO run by a convener and they leave that ACO, they can't join another convener, another ACO run by that same convener for three years. So clearly, they are seeing something in their data in REACH or in MSP that they're concerned about.
Adam Markovitz:And they have all this stuff about curbing risk coding. They want to use AI infer Abe Sedin talks about AI inferred risk scores, which is basically built on objective signals like prescription fills rather than the diagnosis codes entered by by the doctor. Mhmm. You know, at the same time, I think there's a bigger point, and it is why I'm skeptical that any of this will fully or even adequately solve the problem. You know, some of these are are genuinely, I think, really good ideas.
Adam Markovitz:But the real big tension here, it's it's not one loophole. This is a all of these are voluntary programs, and they're all built on benchmarks and any benchmark can be gamed. And the voluntary part of that makes the benchmarks even the most problematic because to get people to join, you have to make it attractive. And people only join if they think they can make money. You can never really tighten down the rules all the way without losing the participation that the program depends on.
Adam Markovitz:And then the final vicious loop is that every single rule that you add to try to stop gaming makes the program more complex. And the more complex the program gets, the more the doctors and the hospitals need a third party firm to navigate it for them. If you look at who runs these convener firms, many of them used to work for CMS. They used to work for CMMI. They are specifically the people who know the rules the best.
Adam Markovitz:And once you're out of government, of course, you would go run a consulting firm about the program that you helped create. And, of course, if you are a small practice struggling to make ends meet in fee for service and you wanna make money from value based payment, of course, you would contract with a consultant. So to some extent, this is everyone just acting rationally. But I think it's ended us in a really difficult spot. You know?
Adam Markovitz:So I think that's that's sort of where we've where we've left off.
Rob Lott:Well, a difficult spot, but perhaps a glimmer of hope that we might be able to continue learning about these conveners and continue studying them with researchers like Doctor. Adam Markovitz and his colleagues who've really done interesting, important work with this paper. I encourage our listeners to check it out in the June issue of Health Affairs. Doctor Adam Markovitz, thanks so much for taking the time to chat with us today. Really enjoyed it.
Adam Markovitz:Thank you. It's really been a pleasure.
Rob Lott:And to our listeners, thanks for tuning in. If you're a rational actor, you might recommend this podcast to a friend, leave a review, and, of course, tune in next week. Thanks, everyone.
Adam Markovitz:Thanks for listening. If you enjoyed today's episode, I hope you'll tell a friend about A Health Podyssey.