Organizations operating or advocating for ACOs hailed the overall results but urged changes to the programs.

Nov. 8—Thirty-one percent of Medicare accountable care organizations (ACOs) garnered shared savings in 2016—the same share as the previous year.

The Medicare Shared Savings Program (MSSP) is the federal government’s flagship ACO program and includes more than 90 percent of all Medicare ACOs.

A key performance aspect—and a central goal of many providers that launch ACOs—is to reduce spending and improve quality enough to earn shared savings under the program.

In 2016, 134 out of 432 ACOs, or 31 percent, generated more than $700 million in shared savings, according to data from the Centers for Medicare & Medicaid Services (CMS). That year was the first since the MSSP started in which the percentage of ACOs with shared savings did not increase. ACOs with shared savings had steadily increased from 26 percent of the 220 ACOs in the combined first payment years of 2012 and 2013, to 31 percent of the 392 ACOs in 2015.

“This is hard stuff; it’s not easy to get the culture change and the behavior change you need at the ground level and across the board, and it just takes time,” said Jeffery Spight, president of Collaborative Health Systems, which helps operate ACOs. “A lot of the ACOs are still getting some traction and learning how to do this.”

Detailed results are available in a public use file.

The vast majority of MSSP ACOs participated in Track 1, which has only upside risk, with a smaller number in Track 2 and Track 3, which include downside risk. In 2016, no Track 2 ACOs had shared losses, but four Track 3 ACOs did, according to the recent CMS data.

Big differences emerged in the types of ACOs that were most likely to generate shared savings. The 134 physician-only ACOs were the most likely (45 percent did so), while the 226 hospital ACOs were the least likely (23 percent).

New Benchmark Approach

Importantly, ACOs renewing in 2016 had their spending performance measured against a rebased benchmark, which included an adjustment for prior savings.

Fifty-nine percent of renewing ACOs received such an adjustment, which averaged $197, according to CMS. But ACOs that fell short of savings or that were trending in the wrong direction had, on average, much larger dollar-amount changes in their benchmarks compared with ACOs that either garnered shared savings or were trending toward such an accomplishment.

Although Spight downplayed the role of the benchmark reset, which CMS implemented for the longest-running ACOs (those that launched in 2012 and 2013), the Medicare data showed that shared savings stagnated among those older ACOs while increasing among newer ACOs.

Among ACOs launched in 2012, 42 percent generated shared savings in both 2015 and 2016. Among ACOs launched in 2013, the percentage with shared savings decreased from 37 percent in 2015 to 36 percent in 2016. Meanwhile, among the 100 ACOs that launched in 2014, the proportion with shared savings increased from 22 percent in 2015 to 36 percent in 2016; and among the 85 ACOs launched in 2015, the percentage with shared savings increased from 21 percent in their inaugural year to 26 percent the following year, according to CMS data.

Benchmarking obscures the progress that the ACO program has stimulated, Spight said in an interview. “The practices we work with are better practices today than they were four years ago, and that’s impacting all of their other lives: their commercial lives, their Medicare Advantage lives, and their Medicaid lives,” he said. “You’re seeing how they practice changing for everybody.”

In quality-related tracking, 330 of the 428 ACOs subject to pay-for-performance measures earned an average quality score of 94 percent. The remaining 98 ACOs received a quality score of 100 percent since they were in pay-for-reporting status.

CMS highlighted that of the MSSP ACOs that fell short of qualifying for shared savings, 107 (25 percent) were “trending positive” in 2016, marking an increase of four percentage points from the prior year.

The highest-performing ACOs fared notably better in spending compared to the worst-performing ACOs. For example, ACOs with shared savings were able to cut inpatient hospital spending by 5 percent compared to their benchmark, while costs for the worst-performing ACOs increased by 8.6 percent.

Similarly, total Part B physician spending was 0.2 percent higher than the benchmark for ACOs with shared savings, and 7.4 percent higher for the worst-performing ACOs.

Big utilization differences also emerged, with shared savings ACOs cutting skilled nursing facility days by 21.5 percent compared to their benchmark, compared with an increase of 10.3 percent for the worst-performing ACOs.

The much-smaller Pioneer and Next Generation ACO programs earlier reported much better results. Six of eight Pioneer ACOs and 11 of 18 Next Generation ACOs earned shared savings in 2016, according to CMS data.

The Pioneer program launched in 2012 with 32 ACOs and ended in 2016 with eight, while 2016 was the first operational year for the Next Generation ACO program.

The Next Generation ACOs—unlike those in MSSP Track 1—all face two-sided risk. The best-performing Next Generation ACO garnered more than $12 million in shared savings, while the worst-performing had more than $6 million in losses.

Overall, Medicare ACOs generated $836 million in savings and provided Medicare with net savings of $71.4 million in 2016.

Changes Urged

Advocates for organizations that operate ACOs hailed the overall performance results but urged changes.

For instance, in a statement, Premier urged CMS to “address antiquated policies that impede success and innovation to allow providers participating in APMs [alternative payment models] additional opportunities for cost and quality improvement in order to ultimately better serve their patients.”

The National Association of ACOs (NAACOS) recommended that CMS modify its approach to risk adjustment and make changes to ACO benchmarking.

“These results show the growing success of ACOs, which is a positive trend that should not be ignored,” Clif Gaus, president and CEO of NAACOS, said in a written statement. “A lot has been accomplished in a relatively short amount of time, and ACOs are on the front line of redesigning healthcare delivery. This is a moment to celebrate them and their hard work.”

Other Changes

Amid a push for tax cuts, Ken Perez, vice president of healthcare policy for Omnicell, expects rising healthcare costs to garner increased attention.

“Thus, the pressure to somehow bend the healthcare cost curve won’t go away—it will grow—and ACOs, which were actually introduced as a concept by Republicans during the George W. Bush administration, will continue to be the lead dog in the pack of value-based care initiatives,” Perez said. “In the future, ACOs should benefit from the Trump administration’s expected easing of reporting requirements and allowing of more waivers of fee-for-service rules.”

Spight has urged changes to how risk adjustment is applied to MSSP ACOs.

“It obscures some of the real results and the real performance,” Spight said. “If your risk adjustment is going to move 2 or 3 percent, that can overwhelm any performance results that you had or can make it harder to pull it apart.”

Specifically, the current approach to risk adjustment obscures the success of many ACOs in reducing utilization, Spight said.

The use of prospective assignment of beneficiaries can compound impacts from risk adjustment.

“Most of their performance is hiding what they’ve actually gotten done because of how the assignment works and how the risk adjustment is applied,” Spight said.

Rich Daly is a senior writer/editor in HFMA’s Washington, D.C., office. Follow Rich on Twitter: @rdalyhealthcare

Publication Date: Wednesday, November 08, 2017