Analysis: MSSP ACOs Have Performed Below CBO Estimates | Healthcare Informatics Magazine | Health IT | Information Technology Skip to content Skip to navigation

Analysis: MSSP ACOs Have Performed Below CBO Estimates

April 3, 2018
by Rajiv Leventhal
| Reprints
The research also reveals that two-sided risk Medicare ACOs could reduce future Medicare costs

According to a new analysis from Washington, D.C.-based consulting firm Avalere, ACOs (accountable care organizations) participating in the federal Medicare Shared Savings Program (MSSP) have performed considerably below the financial estimates from the Congressional Budget Office (CBO) made in 2010 when the MSSP was enacted as part of the Affordable Care Act (ACA).

CMS’ (the Centers for Medicare & Medicaid Services) MSSP model has grown from 27 ACO participants in 2012 to 561 in 2018. Most MSSP ACOs continue to select the upside-only Track 1, which does not require participants to repay CMS for spending above their target.

But Avalere’s research shows that the actual ACO net savings have fallen short of initial CBO projections by more than $2 billion. In 2010, the CBO projected that the MSSP would produce $1.7 billion in net savings to the federal government from 2013 to 2016. However, the MSSP increased federal spending by $384 million over that same period, representing a difference of more than $2 billion, according to Avalere. “The Medicare ACO program has not achieved the savings that CBO predicted because most ACOs have chosen the bonus-only model,” said Josh Seidman, senior vice president at Avalere.

The research further revealed that while the MSSP overall was a “net cost” to CMS in 2016 (referring to the aggregate impact of shared savings, performance bonuses, or penalties, combined with the program savings), there is evidence that individual ACO performance may improve as they gain years of experience with the program.

Avalere found that MSSP ACOs in their fourth performance year produce net savings to the federal budget, totaling $152 million. These results suggest that CBO’s initial projections may not have taken into account the time it takes for ACOs to gain experience with the program and to start to produce consistent savings, according to the researchers.

What’s more, the analysis also shows that the downside-risk models in the MSSP (Tracks 2 and 3) have experienced more positive financial results overall, indicating the potential for greater savings to CMS over time as the number of downside-risk ACOs increase. The upside-only model (MSSP Track 1) increased federal spending by $444 million compared to the downside-risk ACOs (MSSP Tracks 2 and 3) that reduced federal spending by $60 million over five years.

Indeed, as it stands today, MSSP Track 1 remains by far the most popular option for ACOs, representing 82 percent of all MSSP ACOs in 2018. Recently, the National Association of ACOs, the American Medical Association (AMA) and others jointly signed a letter requesting that CMS allow certain ACOs to continue in MSSP Track 1 for a third agreement period before having to move to a two-sided risk model.

When ACOs are in a one-sided risk model, however, they do not share losses with the government when they overspend past their benchmarks, but they do share in the gains. As such, in these one-sided risk models, CMS is on the hook for the losses all on its own.

“While data do suggest that more experienced ACOs and those accepting two-sided risk may help the program to turn the corner in the future, the long-term sustainability of savings in the MSSP is unclear. ACOs continue to be measured against their past performance, which makes it harder for successful ACOs to continue to achieve savings over time,” said John Feore, director at Avalere Health.

The research also found that MSSP ACOs have produced $1.6 billion in program savings compared to benchmark projections over the life of the program, increasing the savings each year. As such, Avalere experts noted that despite the MSSP increasing federal spending, ACOs are still reducing spending compared to projected benchmarks.

For the Avalere research, the consultancy used 2012 to 2016 MSSP ACO participation and performance data. To estimate the aggregate net savings to CMS for each ACO, Avalere subtracted the aggregate program savings from the aggregate participant earned savings. “Program savings” refers to the amount of Medicare spending below (or above) the target amount and “participant earned savings” refers to the amount of shared savings or reconciliation payments that were earned by such participants.

Similar to Avalere, the Charlotte, N.C.-based Premier has seen that ACO performance in the MSSP has had mixed operational results. In a statement reacting to the report, Premier said that “On one hand, ACO savings were optimistically modeled in 2010, with a significant underestimation of the complexity of the care delivery shift and the investments required to transform entire systems of care. At the same time, models ignored the difficult reality of operating simultaneously in both a fee-for-service and value-based environment. On the other hand, MSSP ACOs did bend the cost curve relative to benchmark projections for spending by $1.6 billion, and they continue to improve those savings the more years the ACO participates in the program.”

Get the latest information on Health IT and attend other valuable sessions at this two-day Summit providing healthcare leaders with educational content, insightful debate and dialogue on the future of healthcare and technology.

Learn More



Mass. General, Eastern Maine Healthcare Systems Form Clinical Affiliation

Massachusetts General Hospital will form a clinical affiliation with Eastern Maine Healthcare Systems, in which the two provider organizations will collaborate on areas as telemedicine, research, and protocols for providing care, according to a report in the Boston Globe.

Humanitarian Data Exchange Wins Health Data Liberator Award

Sarah Telford and Ahmadou Dicko were named the winners of this year’s Health Data Liberator award at the Health Datapalooza conference in Washington, D.C., for their work on the Humanitarian Data Exchange.

Survey: Optimism for Health IT Startups in 2018, Skepticism for Amazon Healthcare Partnership

Despite all the buzz about new entrants disrupting healthcare, the majority of healthcare stakeholders are dubious about the impact of the Amazon/Berkshire Hathaway/JP Morgan healthcare partnership and believe the effort will face substantial challenges, according to a survey by venture capital firm Venrock.

NIH Awards $10M to Alabama-based Newborn Genome Sequencing Project

The National Institutes of Health (NIH) has awarded a four-year, $10 million grant to HudsonAlpha Institute for Biotechnology, a Huntsville, Ala.-based genomics and genetics research institute, in collaboration with the University of Alabama at Birmingham (UAB) School of Medicine and the University of Mississippi Medical Center, to investigate how genome sequencing can help with the diagnosis and care of babies with birth defects and genetic disorders.

Senate Committee Advances Opioid Bill that Includes Telehealth Provisions

The Senate Health, Education, Labor and Pensions (HELP) Committee voted Tuesday to advance a bipartisan opioid bill, called the Opioid Crisis Response Act of 2018, that includes provisions promoting the use of telemedicine in substance abuse treatment.

Florida Insurer Establishes Digital Health and Wellbeing Program for Members

Florida Blue, a health insurer based in Jacksonville, has announced a partnership with Welltok. The goal of the collaboration will be to provide Florida Blue members with access to a digital health and wellbeing program designed to help them become and stay healthy.