Critics have claimed that the ACA overlooked the need to reform the delivery system in our nation so as to constrain its costs and improve its quality. A careful examination of the law, however, shows that it constitutes one of the most aggressive efforts in the history of the nation to address the problems of the delivery system.

Perhaps a fairer criticism of the law is that it tried to do too much — that it launched too many divergent experiments and lacks a coherent strategy. The number and diversity of the provisions in the ACA regarding delivery-system reform (see the Supplementary Appendix, available with the full text of this article at NEJM.org) reflect the widespread uncertainty in 2010 — and today — about how, precisely, to improve the performance of our nearly $3 trillion health care enterprise.

To organize our review of these provisions regarding delivery-system reform, we lump them somewhat artificially into four categories on the basis of their approach to improving health care delivery: changes in the way the government pays for health care, changes in the organization of health care delivery, changes in workforce policy, and changes intended to make government more nimble and innovative in pursuing future health care reforms. In all these categories, space permits only brief descriptions of selected programs.

Changes in Payment

The ACA embraced and accelerated several previous federal efforts to move away from volume-based, fee-for-service reimbursement and to link government payments for health services to providers' performance.

Incentives to Reduce Medicare Readmissions

Figure 2. Figure 2. All-Cause, 30-Day Hospital Readmission Rate among Medicare Beneficiaries. Adapted from the Geographic Variation Public Use File.10 The inset shows the same data on an enlarged y axis.

Starting in October 2012, hospitals with higher-than-expected rates of readmissions of Medicare beneficiaries within 30 days have been subject to financial penalties. Since the initiation of the program, 30-day readmission rates nationally have declined from more than 19.0% to less than 18.0%, equivalent to approximately 150,000 fewer readmissions annually among Medicare beneficiaries (Figure 2).10,11 However, the appropriateness of current readmission measures has been questioned because of evidence that safety-net hospitals and large teaching hospitals may be unfairly penalized under the program owing to the social and medical complexity of their patient populations.12,13

Incentives to Reduce Hospital-Acquired Conditions

The ACA expanded a previous program of the Centers for Medicare and Medicaid Services (CMS) that penalized hospitals for egregious avoidable threats to the safety of Medicare patients (so-called never events). Under the ACA program, hospitals that perform in the lowest quartile with respect to rates of hospital-acquired conditions (including avoidable infections, adverse drug events, pressure ulcers, and falls) may lose 1% of their Medicare payments. This payment program complements other ACA-related initiatives designed to improve patient safety, notably the Partnership for Patients described below.

Figure 3. Figure 3. Percent Change in Hospital-Acquired Conditions from 2010 to 2013. Adapted from the Agency for Healthcare Research and Quality.14 UTI denotes urinary tract infection.

Recent data from the Department of Health and Human Services (DHHS) show the first-ever documented decline in composite rates of hospital-acquired conditions nationally: 17% from 2010 to 2013 (Figure 3).14 The DHHS estimates that these safety improvements prevented 50,000 deaths and saved $12 billion, although these calculations are probably somewhat imprecise. Whether ACA programs accounted for all or part of these gains is uncertain.

Pay-for-Value Programs for Hospitals and Physicians

The ACA creates Medicare payment incentives for hospitals and physicians to improve their performance on a variety of quality and cost metrics other than hospital-acquired conditions and readmissions. The program went into effect in 2013 for hospitals, with 1% of total Medicare payments being redistributed to those that performed well on a variety of cost and quality measures. By 2017, a total of 2% of Medicare payments will be redistributed under the program. On the physician side, the incentive program began in 2015 with large group practices on a voluntary basis and is progressing to a mandatory program that will include smaller and solo practices by 2017. Year 1 results show a modest financial effect on physicians. Payment adjustments range from a 1% decrease to a nearly 5% increase15 — but results are too preliminary to draw any definitive conclusions about the effect of the program.

Bundled Payments

Almost 7000 hospitals, physician organizations, and post–acute care providers have signed up to participate in bundled-payment initiatives created under the ACA.16 These provide a single payment for a specified set of hospital, physician, and post–acute care services related to a given procedure or condition. The effects of this bundled-payment experiment remain to be assessed.

Changes in the Organization of Health Care Delivery

Accountable Care Organizations

The ACA encourages health care providers to form new organizational arrangements called accountable care organizations (ACOs) that are intended to promote integration and coordination of ambulatory, inpatient, and post–acute care services and to take responsibility for the cost and quality of care for a defined population of Medicare beneficiaries. Under the Medicare Shared Savings Program (MSSP) of the ACA, providers who create such organizations and who also maintain or improve the quality of care can share part of any savings they achieve.

Providers can also elect to become so-called Pioneer ACOs, which not only share savings but also accept substantial risk if expenses for Medicare patients are greater than expected. Recently, CMS announced still other variations on the ACO theme, including arrangements in which ACOs function very much like Medicare Advantage plans.17 Indeed, many observers see ACOs as a bridge from fragmented fee-for-service care to integrated, coordinated delivery systems that resemble the tightly organized Medicare Advantage plans.

The two existing varieties of ACOs have spread with considerable speed. The MSSP has 405 participating ACOs serving 7.2 million Medicare beneficiaries (14% of the Medicare population).18 Quality measures have generally improved for the 33 indicators tracked by MSSP, and patients report better care experiences in some respects than Medicare beneficiaries who are not part of ACOs.19 CMS estimates the savings at approximately $700 million, as compared with control populations not enrolled in MSSP. A total of 32 organizations started in the Pioneer program; 11 transitioned to the MSSP track, and 2 withdrew entirely. The secretary of health and human services reports that the Pioneer program saved $385 million in the first 2 years, as compared with fee-for-service Medicare beneficiaries.20 These cost and quality results are early and modest, and further evaluation is needed before definitive judgments can be made.

Primary Care Transformation

The ACA has supported a variety of programs to improve the delivery of primary care. An example is the Comprehensive Primary Care Initiative, in which 30 payers and 492 primary care providers serving 2.5 million patients in seven markets are testing whether an innovative payment and organization model can control expenses and improve quality of care. The projects emphasize care coordination, improved chronic disease management, greater access to primary care, and administrative simplification. Initial evaluations show that the program overall has reduced monthly Medicare expenditures per beneficiary by $14, or 2%. Although the practices showed a significant reduction in emergency-department visits and inpatient hospitalizations, early results show no meaningful improvement in quality of care after 1 year.21 As with ACOs, it is too early to draw firm conclusions about the effects of the Comprehensive Primary Care Initiative experiment. Although it is promising that savings occurred in the first year, the real test will be to see whether the savings persist.

Changes in Workforce Policy

Among several workforce initiatives under the ACA, perhaps the most notable areas of focus are on increasing the attractiveness of primary care as a career and enhancing its availability to Medicaid populations. With full federal funding, one ACA provision required all state Medicaid programs to pay primary care physicians at Medicare rates (a considerable increase in many states) for 2 years. A study of 10 participating states showed that the availability of primary care appointments for Medicaid patients rose by nearly 8% among providers already accepting Medicaid patients, as compared with an increase of only approximately 1% among privately insured patients.22 However, the pay increase had no discernible effect on the proportion of providers participating in the Medicaid program.23 A total of 15 states have decided to extend the increased primary care payments beyond the 2 years with the use of only state funds, 23 states and the District of Columbia have decided to revert to pre-ACA payment rates, and 12 states have not yet decided about next steps.24

The ACA also added $1.5 billion to a venerable program, the National Health Service Corps, which has offered scholarships and loan forgiveness for decades to young primary care clinicians who volunteer to practice in underserved areas. From 2009 through 2013, this additional funding supported more than 14,000 new providers, including 8900 primary care clinicians.

One unfulfilled promise of the ACA has been the failure to establish a National Health Care Workforce Commission authorized by the law for the purpose of developing policy on the appropriate supply and distribution of health professionals. The President has appointed members, but the Congress has not appropriated the funds necessary for the operation of the commission.