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Medicare ACOs Produce $411M in Savings in 2014, Many Fall Short of Bonuses

August 26, 2015
by Rajiv Leventhal
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In total, 353 Medicare accountable care organizations (ACOs) generated more than $411 million in net savings in 2014, although many 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 CMS data, 92 of the 333 Medicare Shared Savings Program (MSSP) ACOs held spending $806 million below their targets and earned performance payments of more than $341 million as their share of program savings. In the Pioneer ACO program, which began with 32 ACOs in 2012, but is now down to 20 after several organizations dropped out, 11 organizations generated savings outside a minimum savings rate and earned shared savings payments of $82 million. In total, 103 Medicare ACOs, or 29 percent, received bonuses in 2014.

What’s more, bonuses aside, the data revealed that 15 out of the 20 Pioneer ACOs (75 percent) and 181 of the 333 (55 percent) MSSP ACOs generated some savings in 2014, meaning that 25 percent of those in the Pioneer program and 45 percent of MSSP ACOs generated no savings last year. As a whole, Medicare ACOs generated over $417 million in savings in 2013, a number slightly higher than what 2014 savings delivered.

Furthermore, in their third performance year, Pioneer ACOs showed improvements in 28 of 33 quality measures. The results show that ACOs with more experience in the program tend to perform better over time, CMS said. Of the 333 Shared Savings Program ACOs, 119 are in their first performance year in Track 1, which involves standing up the program without the financial risk associated with later tracks. Medicare Shared Savings Program ACOs that reported quality measures in 2013 and 2014 improved on 27 of 33 quality measures, according to CMS.  

“These results show that accountable care organizations as a group are on the path towards transforming how care is provided," said CMS Acting Administrator Andy Slavitt. “Many of these ACOs are demonstrating that they can deliver a higher level of coordinated care that leads to healthier people and smarter spending.”

Additional noteworthy facts from the 2014 quality and financial performance results of Pioneer ACOs include:

  • During the third performance year, Pioneer ACOs generated total model savings of $120 million, an increase of 24 percent from performance year 2 ($96 million), which was itself an increase from performance year 1 ($88 million).
  • Of the five Pioneer ACOs that generated losses, three generated losses outside a minimum loss rate and owed shared losses.  These ACOs are paying CMS $9 million in shared losses.
  • Among ACOs that entered the program in 2012, 37 percent generated shared savings, compared to 27 percent of those that entered in 2013, and 19 percent of those that entered in 2014.
  • Total model savings per ACO increased from $2.7 million per ACO in performance year 1 to $4.2 million per ACO in Performance Year 2 to $6.0 million per ACO in performance year 3.
  • The organizations in the Pioneer program showed improvements in 28 of 33 quality measures and experienced average improvements of 3.6 percent across all quality measures compared to performance year 2. Particularly strong improvement was seen in medication reconciliation (70 percent to 84 percent), screening for clinical depression and follow-up plan (50 percent to 60 percent and qualification for an electronic health record incentive payment (77 percent to 86 percent).
  • The mean quality score among Pioneer ACOs increased to 87.2 percent in performance year 3 from 85.2 percent in performance year 2, which was itself an improvement from 71.8 percent in performance year 1.

Additional Medicare Shared Savings Program results include:

  • No Track 2 MSSP ACOs owed CMS losses. Total net savings to the Medicare Trust Funds was $465 million, an increase from 2013.
  • Shared Savings Program ACOs that reported in both 2013 and 2014 improved on 27 of 33 quality measures. Quality improvement was shown in such measures as patients’ ratings of clinicians’ communication, beneficiaries’ rating of their doctor, screening for tobacco use and cessation, screening for high blood pressure, and electronic health record (EHR) use.

In a statement, Joe Damore, vice president, population health management, of the Charlotte, N.C.-based Premier, Inc., said, “Members of the Premier healthcare alliance commend all 353 participating care providers on the successes of the Medicare Shared Savings Program and the Pioneer Accountable Care Organization Program for their notable quality improvements and $411 million in total savings.”

Damore continued, “We believe ACOs hold great promise and are particularly pleased that more than 45 percent of the MSSP and Pioneer ACOs participating in Premier’s population health management collaborative, one of the largest ACO collaboratives in the country, qualified for shared savings payments. Critical to their success, collaborative members focus on 10 key strategies to operate a highly-successful population health management entity, including benchmarking performance with peers, population health data management, leveraging a gap assessment tool and sharing best practices.”

The number of beneficiaries served by ACOs is likely to continue to grow.  Since the advent of the programs, the number of Medicare beneficiaries served by ACOs has consistently grown from year to year, and early indications suggest the number may grow again next year, CMS said.

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