Accountable Care Organizations

It’s time to acknowledge the success of CMS’s MSSP

December 2, 2019 7:09 pm

“All the world loves a winner …”

– Knute Rockne

At some point in every presidential term, the administration must change from being a critic of the status quo to its owner. That transformation is a lot easier when an existing program, even one championed by the previous administration, is successful.

A prime example is the Medicare Shared Savings Program (MSSP), which was mandated by the Affordable Care Act. It also is the flagship and largest accountable care organization (ACO) program administered by CMS. In 2018, the MSSP’s 548 ACOs across 50 states provided healthcare for 10.1 million Medicare beneficiaries  — nearly a fifth of the entire Medicare beneficiary population.

Upside-only ACOs targeted for criticism

Despite the MSSP’s seven-year track record and generally steady growth in provider participation, CMS Administrator Seema Verma has been critical of the upside-only ACOs that have accounted for the vast majority of the program’s participants since its inception in 2012.

In her speech at the American Hospital Association’s annual meeting in May 2018, Verma observed, “And even more concerning, these [upside-only] ACOs are actually increasing Medicare spending.” She added, “While we understand that systems need time to adjust, our system cannot afford to continue with models that are not producing results.”1

CMS reports outstanding MSSP performance results

However, at the end of September, CMS  announced impressive 2018 performance  results for the MSSP. In total, the program’s ACOs saved Medicare $1.7 billion for the year, and $739.4 million net after accounting for shared savings bonuses and collecting shared loss payments. The net savings to CMS represented  a 135% increase over the $314 million in net savings generated by the program in 2017. Per-beneficiary savings, a key performance measure, more than doubled from the previous year, from $35 to $73.

Almost two-thirds of MSSP ACOs saved Medicare money relative to CMS-set spending targets, and 37% saved enough money to earn shared savings bonuses. The ACOs that received bonuses reported decreases in inpatient, emergency department and post-acute care spending and utilization.

A possibly better metric for measuring ACO success

Although the MSSP savings to Medicare, based on performance against CMS-set benchmarks, are significant and improving, some researchers contend that comparing Medicare spending to what spending would be like in the absence of ACOs is a better metric. This comparison has been termed “counterfactual” data, and analyses by Harvard University, the Medicare Payment Advisory Commission and the National Association of ACOs have concluded that ACOs are lowering Medicare spending by 1% to 2%, which is striking, given the nation’s steadily rising healthcare expenditures.2

According to an analysis of the 2018 MSSP results by consulting firm Avalere, physician-led ACOs generated nearly seven times greater savings per beneficiary than hospital-led ACOs were able to achieve. Low-revenue ACOs, a new designation that applies to most physician-led ACOs under the recently revamped MSSP, generated $180.41 in savings per beneficiary in 2018, while high-revenue ACOs, which were mostly hospital-led, produced an average savings of $26.76 per beneficiary.3

Quality remains high — as does the need for engaged physicians

Moreover, in 2018, MSSP ACOs achieved quality scores of almost 93%, on average, in line with the three previous years. ACOs that joined the program in 2016 or 2017 improved their quality measure performance by an average of 27% in 2018. The MSSP financial and quality results for the past several years clearly show that ACOs are learning organizations, improving their performance over time.

And who are the key learners? Physicians. They play a critical role in transitioning an organization from a fee-for-service mindset to the accountable care model. They also are critical for generating new ideas to reduce costs and improve quality.

So what can ACOs do to keep physicians motivated?

One novel approach is physician-directed reinvestment, pioneered by Stanford Hospital and the University of Utah. Under Stanford Hospital’s Cost Savings Reinvestment Program, medical school faculty are asked to come up with a cost-saving idea or intervention, and if it is approved and implemented, 25% to 50% of the realized cost savings are shared with the physicians who generated the idea and carried it out. Saliently, the funds cannot be used as any form of salary support or compensation for physicians, but they can be used at the discretion of the departments for supplies, research-related expenses and continuing education.4

Similarly, the University of Utah Health Care Partners Program seeks to make physicians the school’s cost-cutting champions by tapping physicians to identify the best areas for cost-cutting initiatives and rewarding them with financial incentives.5

Physicians even more important with downside risk

Because the Trump administration and congressional Republicans are not in a position to replace the Affordable Care Act, CMS has pragmatically chosen to tout the MSSP’s positive 2018 results, even though they were largely driven by upside-only ACOs. Given the December 2018 Pathways to Success overhaul of the MSSP — which pushes participants to take on downside risk much more quickly — physician leadership and innovation will be even more critical for ACO success. 

[1]   Gregory, J., “CMS’s Verma suggests upside-only ACOs ‘are not producing results,’” HealthExec, May 8, 2018.

[2] National Association of ACOs, “Medicare accountable care organizations generated $1.7 billion in savings last year,” news release, Sept. 30, 2019.

[3] LaPointe, J., “Physician-led ACOs saved more than hospital ACOs in 2018,” Rev Cycle Intelligence, Oct. 16, 2019.

[4] Stanford Medicine, “Showing a Commitment to Cost Savings and High-Value Patient Care,” accessed Oct. 17, 2019.

[5] University of Utah, “How Do We Make Physicians Our Cost-Cutting Champions?” accessed Oct. 17, 2019.


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