Good News/Bad News: Which Side of the ACO Story Are You On? | Rajiv Leventhal | Healthcare Blogs Skip to content Skip to navigation

Good News/Bad News: Which Side of the ACO Story Are You On?

February 1, 2018
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Once again, Medicare ACO data reveals a mixed bag of results

I’m never a fan of when people have news to tell me and they ask, “Do you want to hear the good news or the bad news first?” I feel that this question puts preconceived notions in my head and if anything, it ruins the good news knowing that bad news is accompanied with it. I’d rather you just tell me what the news is and let me decide if it’s good or bad!

So that’s exactly what I am going to do here. In the past few years, when the Centers for Medicare & Medicaid Services (CMS) has released the data from the previous year’s Medicare ACO (accountable care organization) programs, it was always tricky to figure out what story the information was really telling.

On one hand, if you were to read just the CMS announcements on their ACO results, you would think that the programs are performing flawlessly. Here’s an example from 2016, in which the agency’s announcement stated, “According to the results, over 400 Medicare ACOs generated more than $466 million in total program savings in 2015, accounting for all ACOs’ experiences. Of these, 125 qualified for shared savings payments by meeting quality performance standards and their savings threshold.”

On the other hand, a deeper dive into the data tells a bit of a different story. Using the same year, 2016, Healthcare Informatics reported at the time, “Although more than 400 Medicare ACOs generated more than $466 million in total program savings in 2015, nearly seven in 10 of those ACO organizations (279 out of 404) did not generate enough savings to receive bonuses. So while the total savings of Medicare ACOs did total $466 million [in 2015], it should be noted that many ACOs are not generating savings at all, or are generating some savings but not enough.

As you can see, it’s clear how the same set of numbers can tell two different narratives. The CMS announcement touted the total savings, but did not highlight that the savings were actually only coming from 30 percent of those ACOs—meaning the remaining 70 percent were either not generating enough shared savings to qualify for earnings or were losing money outright. As our Editor-in-Chief Mark Hagland stated in an analysis at the time, it would be helpful for the public if CMS officials were more straightforward about ACOs’ level of progress.

This past fall, CMS this time didn’t release the ACO data with much elaboration at all. The agency issued a news release for the year one results of its Next Generation ACO program, which we covered in October, but for its Medicare Shared Savings Program (MSSP) participants, there was no announcement; data for these ACOs could be viewed online in CMS’ Public Use File.

The 2016 Next Gen ACO data revealed that 61 percent of program participants (11) were able to earn shared savings while the remaining seven ACOs in this model generated losses outside a minimum loss rate and thus owed shared losses. Adding up the 11 ACOs which were able to generate savings ($71 million) and subtracting from the seven ACOs which owed losses ($23 million), the net of all gross savings and losses is about $48.3 million in savings, per the CMS data. What’s more, all 18 ACOs in this model scored 100 percent on quality across 33 measures they were graded on.  

As for the MSSP data, as detailed in an analysis from the Advisory Board, an estimated 134—or about 31 percent—of the 432 ACOs that participated in MSSP for the program's fifth performance year generated shared savings in 2016. What’s more, 294 of the 432 MSSP ACOs generated neither savings nor losses in 2016, while four generated losses. In sum, the gross savings for this program in 2016 amounted to about $652 billion. And the data also revealed that about 77 percent—or 330—of the 428 MSSP ACOs subject to pay-for-performance measures for the 2016 reporting period achieved an average quality score of 94 percent. The remaining 98 MSSP ACOs, which were in pay-for-reporting status, earned quality scores of 100, according to the analysis.

Comparing 2016 Medicare ACO results with 2015 results, the one main takeaway that sticks out to me is how Next Gen ACO participants performed in the first year of the program. As a refresher, Next Gen participants have the opportunity to take on higher levels of financial risk—up to 100 percent risk—than ACOs in other current initiatives. While they are at greater financial risk, they also have a greater opportunity to share in more of the model’s savings through better care coordination and care management.

Bearing in mind that this model includes two-sided risk, I for one would have expected worse results in just the first year of the program. Consider this: in 2015, MSSP ACOs, which take on less risk overall, had a 30 percent shared savings rate compared with 61 percent in the Next Gen model. While the number of MSSP ACOs (over 400) greatly exceeds the number of Next Gen ACOs (18), this finding was still quite noteworthy to me.