Accountable care organizations (ACOs) generated $313.7 million in savings for Medicare last year, according to the latest data from CMS. The total savings of the 472 Medicare ACOs caring for nine million beneficiaries was $1.1 billion, with $780 million paid to ACOs that met savings goals.
The new figure follows a recent report that the Next Generation ACOs saved $62 million in 2017. The new numbers also follow recent proposals by CMS to overhaul the ACO model, including forcing organizations to take on downside risk much sooner.
The Medicare shared savings program has been up and down in terms of savings since it began in 2012. CMS Administrator Seema Verma, MPH, has ramped up pressure on the ACO model to contribute more savings to the Medicare program. The vast majority—95 percent—of ACOs currently don’t take downside risk, but do take upside risk, meaning they share in savings when they are achieved.
From 2013 to 2016, Medicare spending in the ACO program actually increased as a result of CMS paying more in bonuses than it saved, according to data from Avalere. The shared savings program was originally predicted to save $1.7 billion over that time period.
“The majority of ACOs, while receiving many waivers of federal rules and requirements, have yet to move to any downside risk,” Verma said in May during a speech. “And even more concerning, these ACOs are actually increasing Medicare spending, and the presence of these “upside-only” tracks may be encouraging consolidation in the market place, reducing competition and choice for our beneficiaries.”
However, ACOs tend to save more money with time and as they stay in the share savings program.
For example, Atrius Health, one of the original pioneer ACOs that has since converted to a Next Gen model, saved $10.4 million in 2016, compared to $6.8 million in 2015. The ACO only began seeing upside savings after its third year, CEO Steven Strongwater previously told HealthExec. The organization, which is the largest independent medical group in New England and a non-profit with more than 720,000 patients, takes on two-sided risk and is generally supportive of assuming financial risk to further the goals of value-based care.
More ACOs also shared in the 2017 savings compared to 2016–60 percent of the 472 saved money, with 34 percent earning shared savings, compared to 56 percent and 31 percent, respectively, in 2016.
More ACOs were also due to start taking on more risk before the new proposals, as their previous model tracks allowed them to take upside-only risk for a time period of six years. The new changes would ensure that ACOs can remain in the program without taking on risk down to two years at most. Some argue that the new rules are not needed, as ACOs are already improving on savings and meeting goals of the program. By CMS’s own estimate, more than 100 ACOs could drop out as a result of the new financial risk rules, if they are finalized. In addition, CMS proposed cutting the shared savings from 50 percent to 25 percent, which could deter new entrants.
"For providers beginning the transition to risk-bearing models, the double whammy of greater risk for less reward is like putting up a 'Stop' sign on the road to value-based care," Clif Gaus, ScD, president and CEO of the National Association of ACOs (NAACOs), said in a statement.
"These recent results show that ACOs have turned the corner and this evidence dispels confusion about ACO performance. The hard work of ACOs is paying off–for patients, providers and for the Medicare Trust Fund, and it's essential we strengthen this program for the future,” he said.
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."