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BREAKING: Medicare ACOs Saved $466M in 2015, but Nearly Half Failed to Generate Any Savings

August 25, 2016
by Rajiv Leventhal
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In Aug. 25 announcement, CMS points to the $466 million saved in two federal ACO programs last year, but the data also reveals that 48 percent of Medicare ACOs produced no savings at all, while 69 percent didn’t save enough to qualify for bonuses in 2015

Although more than 400 Medicare accountable care organizations (ACOs) generated more than $466 million in total program savings in 2015, nearly seven in 10 of those ACO organizations did not generate enough savings to receive bonuses, according to an Aug. 25 announcement from the Centers for Medicare & Medicaid Services (CMS).

According to the just-released CMS data, 125 of the 404 total federal ACOs qualified for shared savings payments by meeting quality performance standards and their savings threshold. The results show that more ACOs are sharing savings in 2015 compared to 2014 and that ACOs with more experience in the Pioneer ACO Model and the Medicare Shared Savings Program (MSSP) tend to perform better over time. However, similar to last year, many of these ACOs did not produce enough savings to earn bonuses. The CMS data on the two Medicare ACO programs further reveals:

  • In the Pioneer ACO program, which began with 32 ACOs in 2012, but is now down to 12 after the majority of the organizations dropped out, total model savings of over $37 million were generated in 2015. That number is down from the $82 million saved in 2014, though more ACOs were in the program in 2014 compared with 2015. In this model, there were eight Pioneer ACOs that generated savings last year, six of whom generated savings outside a minimum savings rate and earned shared savings. And, of the four Pioneer ACOs that generated losses, one (OSF Healthcare System, Peoria, Ill.) generated losses outside a minimum loss rate and owed shared losses. They ended up paying $1.6 million back to CMS. For the Pioneer ACOs, however, CMS noted that going into the fourth year of this program, “The benchmarks for the Pioneer ACOs were re-based, and the Model as a whole introduced new financial benchmarking methodologies. Re-basing refers to using a newer set of baseline years to compute financial benchmarks; the new benchmarks are therefore based on ACOs’ spending during their initial years of participation in the Pioneer ACO Model."
  • Meanwhile, MSSP ACOs generated total savings of $429 million in 2015, though just 119 of the 392 organizations (30 percent) earned shared savings by holding spending far enough below their financial benchmarks and meeting quality standards. No Track 2 ACOs owed CMS losses. Further, 83 ACOs had healthcare costs lower than their benchmark, but did not qualify for shared savings, as they did not meet the minimum savings.
  • In sum, with six of 12 (50 percent) Pioneer ACOs generating shared savings, and 119 of 392 (30 percent) MSSP ACOs generating shared savings last year, 279 of the 404 total Medicare ACOs, or 69 percent, did not generate savings outside a minimum savings rate to earn shared savings. These figures are similar to 2014 totals, when in sum, 71 percent of Medicare ACOs did not receive bonuses based on their savings.
  • What’s more, bonuses aside, four in 12 (33 percent) Pioneer ACOs and 190 of 392 MSSP ACOs (48 percent) generated no savings at all last year. Totaled, that means 194 Medicare ACOs, or 48 percent, failed to produce any savings in 2015. So while the total savings of Medicare ACOs did total $466 million last year, compared to $411 million in 2014, it should be noted that many ACOs are not generating savings at all, or are generating some savings but not enough.
  • Collectively, though, Medicare ACOs have generated more than $1.29 billion in total Medicare savings since 2012. “The coordinated, physician-led care provided by accountable care organizations resulted in better care for over 7.7 million Medicare beneficiaries while also reducing costs,” CMS Acting Administrator Andy Slavitt said in a statement. “I congratulate these leaders and look forward to significant growth in the program in the coming year.”
  • ACOs with more experience in the Medicare Shared Savings Program tend to perform better over time. For performance year 2015, 42 percent of ACOs that started in 2012 generated savings above their minimum savings rate (MSR), compared to 37 percent of 2013 starters, 22 percent of 2014 starters and 21 percent of 2015 starters.

Regarding quality results, the Pioneer ACOs continued to show strong performance and improvement across financial, quality of care, and patient experience measures, CMS officials noted. The mean quality score among Pioneer ACOs increased to 92.26 percent in the fourth year from 87.2 percent in the third year. The mean quality score has increased in every year of the model, with a total increase of over 21 percentage points since the first year. Of the 12 Pioneer ACOs, nine had overall quality scores above 90 percent for the fourth year, with scores ranging from 92.59 percent to 98.38 percent.

Quality performance improved considerably from 2014 to 2015 and across all four years of the Pioneer ACO Model. Overall quality scores for nine of the 12 Pioneer ACOs were above 90 percent in the fourth year. All 12 Pioneers improved their quality scores from 2012 to 2015 by over 21 percentage points, according to the CMS data.