Evaluation of CMS’ Next Generation ACO Program

The Medicare Advantage arm of Medicare is operating pretty well–enrollment is growing, and while controversy remains about whether CMS is paying the plans too much, it certainly has delivered good quality care at a reasonable price.  In the two-thirds of Medicare that is still fee-for-service, CMS is working on paying for value and is heavily counting on accountable care organizations to mimic what has occurred in Medicare Advantage.  The ACO program has had its difficulties, with dropouts and lackluster results.  A newer iteration was called the Next Generation ACO model, which places organization at relatively full risk, but also adds features that should enable better care management and utilization control.  So what is the Next Generation generating in terms of results.  The evaluation of first year of the program’s operation has just been released by CMS.   (ACO Evaluation)   One year is too early to really understand the impact of any program, but the evaluation can perhaps give a directional sense.  In 2016, the first year of the program, there were 18 participating ACOs, 15 of which had been in other earlier versions of the ACO initiative.  31,000 providers and 775 facilities were part of these ACOS, and they covered about 475,000 beneficiaries who were “aligned” with the ACOs, which is CMS’ goofy way of attributing their care to an ACO, since they are too chickenshit to allow or require enrollment in one.  The quality and cost outcomes were assessed by comparison with baselines and with control groups of beneficiaries who were not “aligned” with an ACO.

These ACOs experienced about 1.7% lower total spending.  The savings were concentrated in four of the ACOs and much of the savings was attributed to lower skilled nursing facility use.  The actual dollars of reduced spending, $100 million, was lowered to around $60 million in net savings after some sharing of the spending reductions with the ACOs.  These ACOs had about 1.3% fewer hospital days per month, 1.5% fewer evaluation and management visits per month, but 12% more annual wellness visits per year.   In addition, the ACOs appeared to have better performance on quality measures.  The Next Generation ACO initiative is likely to demonstrate that the more you make them look like an MA plan, the better the cost and quality outcomes will be.  Which just begs the question about why we don’t just do more to incentivize beneficiaries to move into MA or really just voucherize the Medicare program.  Beneficiaries get an amount that they can use to buy into an MA plan or if they really want the lousy FFS care management, they can buy a FFS plan.  In the long run, that will do the best job of keeping Medicare costs under control.