ACOs need time before they see savings
Accountable care organizations are finally achieving real savings for CMS, according to recent figures, with the majority of savings coming from ACOs that have been in the game longer.
The longer ACOs are in the Medicare Shared Savings Program (MSSP), the more they save, according to an analysis from Avalere Health, a Washington, D.C.-based healthcare consulting firm.
In 2017, ACOs saved Medicare $314 million, according to CMS calculations. Nearly all of these savings were achieved by ACOs that had been in the shared savings program for four or more years, according to Avalere.
“These results reinforce what we have heard from accountable care organizations—that they need time to realize the fruits of their investments,” Gabriel Sullivan, manager at Avalere, said in the analysis. “Experience matters in driving positive financial performance among accountable care organizations.”
Avalere’s analysis showed the assumption of downside risk, which requires ACOs to pay back any losses to Medicare, was not a reliable predictor of success. The vast majority of ACOs—82 percent—are not taking on downside financial risk.
The findings come as CMS has proposed changing the shared savings program to push more ACOs to take on downside risk after just two years in the program. Current rules allow ACOs up to six years before they start assuming risk. The proposal, which was released in August, was met with some backlash from industry stakeholders, including ACOs that maintain organizations need time in the program before savings are realized.
Past estimates from CMS have shown the shared savings program may actually cost Medicare more by hundreds of millions of dollars, rather than producing savings. However, an industry report that calculates savings differently believes that figure is low, noting that ACOs generated $1.84 billion in savings from 2013 to 2015.
Estimating the true savings of ACOs is important, as the MSSP is the largest alternative payment model in Medicare and represents the broader shift across healthcare to value-based care. In 2018, ACOs covered 10.5 million Medicare beneficiaries and the number of ACOs has grown from 27 in 2012 to 561 in 2018. The new proposal from CMS could lead to a mass exodus of 100 or more ACOs, according the agency’s own estimates.
ACOs that were in the MSSP for at least three years performed better than newer ACOs in performance year 2017, according to Avalere. ACOs with just one to two years of experience increased Medicare spending. During the same year, more than 90 percent of ACOs participated in Track 1, which does not require the organizations to take on financial risk.
The other 10 percent or so of ACOs participated in Track 2 and 3, which require ACOs to share in savings or repay losses based on financial performance.
CMS also changed the way it calculated savings in 2017, which may have improved the overall financial results by incorporating regional spending into benchmark calculations, according to Avalere.
“Provider experience in managing population health, creating data infrastructure, and changing behavior appear to be crucial factors in the success of accountable care organizations,” John Feore, director at Avalere, said in the analysis. “The governments’ new methodology for calculating savings may also affect financial results.”
Amy joined TriMed Media as a Senior Writer for HealthExec after covering home care for three years. When not writing about all things healthcare, she fulfills her lifelong dream of becoming a pirate by sailing in regattas and enjoying rum. Fun fact: she sailed 333 miles across Lake Michigan in the Chicago Yacht Club "Race to Mackinac."