Medicare Shared Savings ACOs saved $1B over 3 years

Accountable care organizations participating in the Medicare Shared Savings Program reduced Medicare spending by almost $1 billion, with ACOs saving more as the program progressed.

The report from the HHS’s Office of Inspector General (OIG) said the 428 participating ACOs also outperformed fee-for-service providers on most (81 percent) of the quality measures, such as readmissions and screenings for future fall risk, while also improving on most (82 percent) of the individual measures over the first three years of the program. Quality improvements within the MSSP had already been seen when it came to reducing readmissions of skilled nursing facilities patients.

MSSP participants could choose from two tracks in the first three years: Track 1, which didn’t include any downside risk for providers, limited shared savings payments to 50 percent of whatever was saved. Track 2 did include downside risk, leaving providers responsible for up to 60 percent of losses as well as being able to receive up to 60 percent of savings. Only five ACOs were in Track 2 during the period studied by OIG.

One-third of participants reduced spending enough to receive a portion of the savings, with each organization receiving an average of $4.8 million each year they earned the shared savings payments. A small subset of ACOs, the report said, showed “substantial” reductions while scoring well on quality measures, saving Medicare an average of $673 per beneficiary for key services.

“These ACOs also maintained high use of primary care services, which can lower utilization and costs for other care, and reduced the use of costly services such as emergency department visits,” the OIG report said. “In contrast, other Shared Savings Program ACOs and the national average showed an increase in per beneficiary spending for key Medicare services.”

OIG said it plans a deeper review of those high performers to better understand how their strategies resulted in greater savings. It did identify some common characteristics—the high-performing ACOs served a larger number of beneficiaries and were more likely to be made up solely of physicians. In a surprising finding, those high performers also had older, more complex patients, meaning the savings couldn’t be attributed to serving healthier beneficiaries.

Notably, the review found ACOs improved their performance as they became more experienced with the program. In its first year, 2013, participants reduced spending by a net amount of $234 million. In 2014, savings increased to $291 million and then jumped to $429 million in 2015. Their quality scores also went up—while in 2014, only 1 percent of ACOs had average quality scores between 95 and 100, 36 percent were in that category in 2015, with 74 percent of all participants scoring 90 or higher.

“With any major payment reform, time may be needed for organizations to make changes to improve quality and lower costs,” the report said. “While policy changes may be warranted, ACOs show promise in reducing spending and improving quality. However, additional information about high‐performing ACOs would inform the future direction of the Shared Savings Program as well as other alternative payment models.”

Track 2 and the new Track 3 within the MSSP are eligible for the 5 percent incentive payment under the Advanced Alternative Payment Models (AAPMs) track of the new Quality Payment Program. As of January, however, only 42 out of the 480 total participating ACOs are in those risk-bearing tracks, with an additional six having committed to Track 1+, which will include downside risk and qualify as an AAPM in 2018.

ACOs avoiding two-sided risk may be leaving money on the table. A recent study from Avalere estimated MSSP participants could’ve earned an additional $886 million based on 2015 numbers if the AAPM bonus had been available.