OIG Report on ACO Savings

By September 5, 2017 Commentary

The Centers for Medicare and Medicaid Services has conducted several demonstrations and programs under which providers have at least some financial risk for the costs of beneficiaries’ care, including the various tracks of the Shared Savings Program.  The Shared Savings Program tracks include Accountable Care Organizations.  The HHS Office of Inspector General evaluated the performance of these programs in a recent report.  (OIG Report)    The OIG looked at the the first three years of the Shared Savings initiative, during which 428 participating ACOs covered about 9.7 million beneficiaries, although the beneficiaries are just imputed, not assigned, to the ACOs.  During the three year period, Medicare spent $168 billion on care delivered by the ACOs and saved one billion dollars compared to benchmarks.  Only a third of the ACOs reduced spending enough to get a shared savings payment from CMS.  An encouraging aspect is that the longer an organization is in the program, the more likely it was to generate savings.  A small subset of ACOs both reduced spending, by an annual average of $673 per beneficiary per year, and showed excellent performance on quality measures.  Overall, ACOs demonstrated very good quality performance and were better than fee-for-service Medicare providers on 80% of measures.

ACOs have generally been risk aversive; only 5 during this study period signed up for downside as well as upside risk.  The Medicare Advantage program has also grown rapidly.  The Medicare Advantage plans often put providers at risk, so many physicians and health systems may prefer to participate through those plans as opposed to an ACO.  A number of ACOs have dropped out of the program over time as well.  And the savings which appear to be generated and shared with a minority of the ACOs, may not be adequate to cover the costs of meeting all the ACO requirements, which can be burdensome.  What is most encouraging about the CMS programs is that they appear to have engaged a large number of physicians and health systems in focusing on how to better coordinate and deliver care for the Medicare population, which hopefully results in actual better health for beneficiaries.

Kevin Roche

Author Kevin Roche

The Healthy Skeptic is a website about the health care system, and is written by Kevin Roche, who has many years of experience working in the health industry through Roche Consulting, LLC. Mr. Roche is available to assist health care companies through consulting arrangements and may be reached at khroche@healthy-skeptic.com.

More posts by Kevin Roche

Leave a Reply