CMS has pinned its cost control hopes in the Medicare FFS arm to accountable care organizations. According to an Avalere analysis, those hopes may be leading to higher spending. (Avalere Analysis) In 2010 the Congressional Budget Office projected savings of about $1.7 billion in Medicare spending from 2013 to 2016 due to enrollment of beneficiaries in ACOs. CMS had similar projections. Avalere looked at actual spending for beneficiaries in the 561 organizations participating in the Medicare Shared Savings Program, the largest component of the ACO initiative. The problem stems from the fact that most of these groups have selected track 1 of the program, under which they get payments for meeting certain targets, but have no downside risk or penalties for failing to meet the targets. Avalere finds that in fact Medicare spending increased about $380 million over this period, because of the savings payments and the lack of penalties for not hitting targets. Many ACOs did not achieve savings, so didn’t get bonus payments, but also weren’t doing anything to control Medicare costs. There is some reason for hope, however, as Avalere also found that the longer an ACO was in the program, the better their performance on controlling costs appeared to be. And ACOs in their fourth year of participating in the program actually saved CMS $152 million. And those few ACOs which participated in downside risk through tracks 2 and 3 saved a total of $60 million over 5 years. So the lesson would appear to be that it would be good to force ACOs to sign up for multi-year participation, and, at least after a couple of years of participation, to require that they take risk in regard to spending targets, so that they are fully incentivized to watch spending carefully.
✅ Subscribe via Email
About this Blog
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. Mr. Roche is available to assist health care companies through consulting arrangements through Roche Consulting, LLC and may be reached at [email protected].
Healthy Skeptic Podcast
This is an outstanding report on total global drug spending and trends, with projections out to 2025. It helps you understand this important area of health care, which does much...
June 1, 2021
MedPAC 2019 Report to Congress
June 18, 2019
What do you get when you combine a company with a commodity business model, that out of desperation massively overpays for another company that has a commodity business model? $10...
July 27, 2022
The “stupid” model for health care venture capital investing is alive and well. Everside health, which operates primary care clinics and has grown by acquiring other failing health care businesses,...
July 26, 2022
Apparently not even a cute name can save you if you have a stupid business. I constantly bemoan the mis-application of capital and health care is Exhibit A. Olive, another...
July 26, 2022
Access ACO Care Management Chronic Disease Comparative Effectiveness Consumer Directed Health Consumers Devices Disease Management Drugs EHRs Elder Care End-of-Life Care FDA Financings Genomics Government Health Care Costs Health Care Quality Health Care Reform Health Insurance Health Insurance Exchange HIT HomeCare Hospital Hospital Readmissions Legislation M&A Malpractice Meaningful Use Medicaid Medical Care Medicare Medicare Advantage Mobile Pay For Performance Pharmaceutical Physicians Providers Regulation Repealing Reform Telehealth Telemedicine Wellness and Prevention Workplace