Medicare ACOs save more money with more time, Avalere says
Accountable care organizations increase savings the longer they are in the Medicare Shared Savings Program, according to a new Avalere analysis.
ACOs in the MSSP for at least four years were behind almost all of the $314 million saved in 2017, which was the first year the program saw savings. Avalere suggested CMS changes to calculating ACO benchmarks may have led to the positive results. The agency that year began to include regional spending in benchmark calculations for those participating in MSSP for a second agreement period.
Avalere also found that assuming downside risk isn't a "reliable predictor of an ACO's success."
Medicare ACOs have been scrutinized recently as more data of their performance becomes available. After the program missed federal cost savings projections from 2013 to 2016, recent results have been more promising. So far, researchers have found that physician-led groups and those with primary care physicians who have patient-centered medical home experience were more likely to achieve savings.
MSSP saved $314 million for Medicare after bonuses paid to participating organizations in 2017. Overall ACOs saved $1.1 billion total and CMS shared $780 million in savings with providers. The agency found that 60% of ACOs saved money while 34% earned shared savings.
With MSSP showing more success, CMS is working to nudge more providers to take on risk. Administrator Seema Verma recently proposed an MSSP overhaul to make ACOs take on financial risk sooner. However, providers don't like the idea. A recent survey by the National Association of ACOs found that nearly three-fourths of ACOs will leave the MSSP next year if they are forced to assume risk. The organization predicted that the change would lead to an "exodus" from the Medicare program.
Despite Verma's statements, Center for Medicaid and Medicare Innovation Director Adam Boehler later said CMS won't force providers into risk-based contracting.
MSSP is CMS' largest alternative payment model (APM). There are 561 ACOs in the program this year accounting for 10.5 million Medicare beneficiaries.
In 2017, more than 90% of MSSP ACOs took part in Track 1, which doesn't require any financial risk. The rest of the ACOs were in Tracks 2 or 3, where they can share savings or repay Medicare losses based on financial performance.
The new report found that longevity, rather than risk, is key to an ACO's success in MSSP. John Feore, director at Avalere, told Healthcare Dive that operational changes, changing physician behavior, infrastructure investments, care redesign and physician buy-in requirements take time. Plus, upfront costs and ongoing expenses may temporarily limit financial success.
ACOs need time to "adjust to a new way of thinking about care delivery," he added.
ACOs with four years of experience in the MSSP saw the best financial performance. Feore said provider experience in managing population health, data infrastructure and changing behaviors, as well as the new methodology for calculating savings, may have been the reason for that success.
"By the fourth year, ACOs have gone through beneficiary assignment, benchmark projection, financial reconciliation and quality performance review processes more than once and are likely more comfortable operating under the program’s requirements," he said. "You can't just flip a switch and expect every ACO to be successful in year one."
Feore said the reason downside risk isn't a reliable predictor of ACO success is that it's only a financial arrangement. "All but one of the Track 2 and 3 ACOs that earned shared savings in 2017 started off as a Track 1 ACO," he said. "So it begs the question of whether accepting downside risk is more a strategic decision to earn a higher shared savings rate by ACOs who already know they are likely to perform well rather than the cause of good performance."