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Study of MSSP ACOs Finds that Earlier Participation Has Led to Bigger Savings

April 14, 2016
by Rajiv Leventhal
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A study of accountable care organizations (ACOs) in the Medicare Shared Savings Program (MSSP) found that the organizations that started earlier in the program have fared better than the ones that started later.

Researchers from various healthcare organizations in Boston, including Harvard Medical School, Brigham and Women’s Hospital and Beth Israel Deaconess Medical Center, studied the MSSP ACOs, which, unlike ACOs in the Medicare Pioneer program, very few face penalties for spending in excess of benchmarks because such downside risk is not currently required. The study was published recently in the New England Journal of Medicine.

On the basis of comparisons of ACO spending with these benchmarks, the Centers for Medicare & Medicaid Services (CMS) has reported savings on average across all ACOs in the MSSP (not including shared-savings bonuses paid) and greater savings achieved by ACOs entering the program in 2012—the program’s first year—than by those entering in 2013. As such, using Medicare claims and CMS definitions of the 220 ACOs entering the MSSP in 2012 or 2013, the researchers compared changes in spending and performance on claims-based quality measures for beneficiaries served by ACOs from before to after the start of ACO contracts with concurrent changes for beneficiaries served by non-ACO providers in ACO service areas.

Indeed, these findings fall in line with what CMS reported last summer: ACOs with more experience in the program were more likely to generate shared savings.  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, CMS said.

According to the research, the first full year of participation in the MSSP was associated with early savings among ACOs that entered the program in 2012 but not among those that entered in 2013. Savings in the 2012 cohort were on a par with savings estimated for Pioneer ACOs, suggesting that one-sided contracts without downside risk (shared savings only) also may elicit effective efforts to reduce healthcare utilization. “Owing to the one-sided nature of almost all MSSP contracts, however, the aggregate $238 million spending reduction suggested by our estimates for the 2012 MSSP cohort did not result in net savings to Medicare, because Medicare paid $244 million in bonuses without recouping losses from ACOs that had spending above benchmarks,” the researchers concluded.

The researchers continued, “Moreover, our results suggest that early gains observed among early MSSP participants may not generalize to later participants. We examined only 12 to 18 months of exposure to MSSP incentives for most ACOs in our study, and savings may grow over time. Nevertheless, if meaningful savings from the expanding MSSP materialize, our findings suggest that they may be slow to develop, because participants with less advanced systems for managing care may enter later and require more time to improve care efficiency. Regulatory changes that strengthen incentives for ACOs to lower spending—incentives that have been very weak thus far—may accelerate savings and will be important to implement and evaluate.”

What’s more, whereas CMS data suggest that savings were generally similar for different types of ACOs, this new research estimated substantially greater savings for independent primary care groups than for groups integrated with hospitals when comparing spending changes in ACOs with local concurrent changes. In particular, independent physician groups have stronger incentives to lower inpatient and hospital outpatient spending than groups integrated with hospitals because their shared-savings bonuses are not offset by forgone profits from reductions in hospital care, they found. “Our findings suggest that financial integration between physicians and hospitals, which may increase commercial healthcare prices, is not necessary for ACO success. Early signals from the MSSP, however, may not predict the long-term efficiencies from various organizational structures under new payment models.”

The researchers concluded, “Our findings extend evidence of small but meaningful reductions in spending, with unchanged or improved quality of care, early in the Medicare ACO programs and suggest that progress toward net savings to Medicare or society may be slow. Continued quasi-experimental evaluations will be important for identifying successful subgroups of ACOs that have developed strategies that could be disseminated and for assessing progress from regulatory efforts to strengthen incentives and encourage participation.”

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