Medicare ACO Performance

By October 9, 2019 October 14th, 2019 Commentary

The Medicare Accountable Care Organization initiative has now been going on for several years in various revised forms and options.  In a recent Health Affairs blog post HHS Secretary Verma described 2018 results and other matters relating to the ACOs.   (HA Post)   According to CMS in 2018 there were 548 accountable care organizations participating in the Medicare shared savings program.  These ACOs generated a total net savings for Medicare of $739.4 million.    Those savings are calculated in comparison to benchmarks purporting to identify average spending on similar beneficiaries to those in ACOs.  If it is like past years, a few organizations accounted for the bulk of the savings.  The ACOs created the most savings in inpatient use, ER visits and post-acute care use.  ACOs that took downside as well as upside risk saved an average of $96 per beneficiary versus $68 per beneficiary for ACOs which only shared in upside performance.  In addition, physician led ACOs did better than hospital led ones.  The two variants tend to take responsibility for different kinds of services with the physician ones tending to only be responsible for outpatient care.  These ACOs showed $180 per beneficiary savings versus only $27 for hospital ones.  93% of ACOs got quality improvement points.

The current administration recently overhauled the shared savings program with something called Pathways to Success, which pushes ACOs to take more downside risk, in exchange for more flexibility in how they provide care.  I am always a little dubious about how much benefit the ACOs are really providing, because we don’t know what utilization or spending would have been without beneficiaries being attributed to an ACO.  And I think it is completely appropriate for CMS to attempt to force organizations to step up and be fully responsible for all spending and for doing better or worse than benchmarks.  That is the only sure way to get the financial incentives aligned with the need to ensure all spending is appropriate.  It is also very meaningful if ACOs can improve quality and especially coordination and management of care.  But a more meaningful initiative for really changing care delivery is the direct primary care contracting model which is being developed.

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.

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