Physician-led accountable care organizations (ACOs) outperform those led by hospitals, according to a new report from Avalere Health. Not only did physician-led ACOs outperform by a significant margin, but all ACOs had higher savings the longer they were around.
Overall, 548 ACOs within the Medicare Shared Savings Program (MSSP) covered 10 million Medicare beneficiaries and cut spending for the federal program by $739 million.
The findings follow another recent study published in The New England Journal of Medicine that revealed physician-led ACOs were more likely to have generated savings over a three-year period.
Part of the reason physician-led ACOs performed better financially––by achieving a higher savings rate relative to benchmarks––may be because they have more incentive to lower costs. The low-revenue, physician-led ACOs studied by Avalere had better savings than high-revenue, hospital-led groups––at a rate of 7 times the savings per beneficiary.
“All ACOs strive to reduce spending while improving quality in the new value-based world,” John Feore, associate principal at Avalere, said in the report. “However, the financial incentives to reduce hospital spending are stronger for ACOs that don’t receive a substantial amount of revenue from hospital admissions.”
However, new ACOs actually increased Medicare spending. All other ACOs reduced spending in 2018, with the highest-performers being those with the most experience. This result has been found across several studies and reports by ACOs.
"As we have found in previous research, ACOs with experience tend to perform better than newer ACOs,” Gabriel Sullivan, consultant at Avalere, said in a statement. “The infrastructure investments required to start an ACO, along with the necessary care coordination efforts, beneficiary engagement, and provider education initiatives take time to produce results.”
It is particularly of note that ACOs tend to fare better with more time in the MSSP after CMS changed the ACO program over the last year. ACOs will now be forced into taking downside financial risk after just two years instead of being allowed to participate with only upside risk––which allows participants to share in the savings but does not require them to pay back over-spending. ACOs have been slow to take on downside risk, with only about one-third having a downside risk contract in 2018.
According to CMS, ACOs saved Medicare $1.7 billion in 2018, before the changes went into effect. More ACOs are taking on downside risk since the changes went into effect, but fewer ACOs overall signed up to participate in the MSSP.
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."