Growth of Accountable Care Organizations in California: Number, Characteristics, and State Regulation.

ABSTRACT

Accountable care organizations (ACOs) result in physician organizations' and hospitals' receiving risk-based payments tied to costs, health care quality, and patient outcomes. This article (1) describes California ACOs within Medicare, the commercial market, and Medi-Cal and the safety net; (2) discusses how ACOs are regulated by the California Department of Managed Health Care and the California Department of Insurance; and (3) analyzes the increase of ACOs in California using data from Cattaneo and Stroud. While ACOs in California are well established within Medicare and the commercial market, they are still emerging within Medi-Cal and the safety net. Notwithstanding, the state has not enacted a law or issued a regulation specific to ACOs; they are regulated under existing statutes and regulations. From August 2012 to February 2014, the number of lives covered by ACOs increased from 514,100 to 915,285, representing 2.4 percent of California's population, including 10.6 percent of California's Medicare fee-for-service beneficiaries and 2.3 percent of California's commercially insured lives. By emphasizing health care quality and patient outcomes, ACOs have the potential to build and improve on California's delegated model. If recent trends continue, ACOs will have a greater influence on health care delivery and financial risk sharing in California.