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Medicare Shared Savings Program Analysis

By November 5, 2019Commentary

The cornerstone of the Medicare accountable care organization program is the financial incentive provided by the shared savings program, which allows the ACOs to participate in spending for attributed members that is below a benchmark, and that, increasingly, requires them to accept risk for spending over the benchmarks.  Some have suggested that the early results showing that ACOs created savings for Medicare were driven by favorable patient selection into the ACOs and/or inclusion of providers who tended to have lower-cost patients.  A new paper at the National Bureau of Economic Research attempts to ascertain whether this is true.   (NBER Paper)   The authors first describe features of the program that might, at least since 2017, encourage attempts at risk selection.  The use of a new regional benchmark after 2017 might result in such attempts, by, for example, gaming which taxpayer identification number a physician uses for billing, but really the ACO patient attribution process is so complex that it would be difficult.

The authors use a couple of new approaches to analyze whether risk selection seems to occur at the physician or patient level.  One was to hold ACO composition steady through the study period (regardless of whether physicians were actually added or dropped) and see if there was any difference in reported savings from that actually calculated by CMS.  In fact there was no discernible difference, suggesting that ACOs did not widely engage in attempting to drop doctors with higher-cost patient panels or add ones with lower-spending patients.  The researchers then employ a second set of tests to assess patient-level selection, such as holding patient attribution to an ACO constant and using different attribution methodologies.  This set of tests also revealed no apparent manipulation to get lower-cost patients into ACOs.  Finally, examination of actual physician entrances and exits to ACOs did not indicate that the ACOs were using patient spending as a reason for any changes.  The bigger problem for the program may be that the savings to date have really been very minor, although every little bit helps.  Providers are being asked to incur a lot of administrative expense for a pretty small return.

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