Accountable Care Organizations

Recent updates and emerging best practices for ACOs in the Medicare Shared Savings Program

Leaders at two small hospitals with successful ACOs say a robust care coordination program is integral.

January 9, 2024 11:26 am

Going into the 12th year since it brought accountable care into the healthcare lexicon, the Medicare Shared Savings Program (MSSP) continues to evolve, with CMS making changes and participants fine-tuning best practices.

Starting with 220 accountable care organizations (ACOs) in 2012-13, the MSSP grew to 561 in 2018. However, the number has been below 500 in all but one year since. One drag on participation has been rules requiring ACOs to take on financial risk more quickly.

As part of CMS’s effort to reverse that trend, key changes came to the program in 2023. The agency sought to strengthen financial incentives for long-term participation by modifying the benchmarking methodology and bolstering financial support for certain low-revenue ACOs and those serving high-risk and dual-eligible populations, according to an HFMA fact sheet.

Although the number of MSSP ACOs subsequently dipped to 456, the lowest total since 2016, that was in large part because of the new ACO REACH program, which launched last year with 132 ACOs and generally features greater levels of risk and reward than the MSSP. Combined, the federal ACO programs in 2023 included more than 1,450 hospitals and encompassed 13 million beneficiaries.

In a January 2023 statement, the National Association of ACOs said it expected “2023 to be a turning point for ACOs and growth in participation to really accelerate in 2024,” in the wake of the changes implemented.

Going into 2024, CMS made adjustments that are less sweeping but still significant, including revisions to quality-related requirements and to processes for determining beneficiary assignment. There also were further refinements to the benchmarking methodology and advance payments, as described in another HFMA fact sheet.

Limited impact on spending

New research published in JAMA Health Forum finds that the MSSP produced modest savings for CMS but resulted in net losses in traditional Medicare (i.e., Medicare fee-for-service) through 2021. The overall program savings stemmed from MSSP-related benchmark reductions in Medicare Advantage (MA).

Totaling between $3.057 billion and $4.339 billion across Medicare, depending on the data source considered, the savings represent less than 0.1% of Medicare spending during the nearly 10-year study period.

The researchers noted that other studies have associated the MSSP with roughly $250 million in annual savings for traditional Medicare. They attributed the discrepancy to “rising bonus payments to MSSP ACOs in the post-pandemic period as well as the shift in MSSP beneficiaries toward hospital-aligned ACOs.” The latter point is an issue because greater spending reductions in traditional Medicare are associated with physician-led ACOs.

“Generating savings in traditional Medicare requires finely tuned incentives that are sufficiently generous to encourage participation but sufficiently strict to generate savings,” the researchers wrote. “This is hard to accomplish over the long term and susceptible to unexpected events (like COVID-19) that undermine benchmark-setting assumptions.

“However, given the link between traditional Medicare spending and MA benchmarks, ACO models and other alternative payment models have the potential to generate savings by reducing benchmarks in MA through gross spending reductions in traditional Medicare.”

The changes implemented for 2023 and 2024 were not in effect during the study period. Still, the findings reflect the need to continue to assess the program as CMS pursues its stated goal of ensuring every beneficiary in traditional Medicare is in an accountable care relationship by 2030.

The central role of wellness visits

As described in interviews with HFMA in August, the recent experiences of MSSP ACOs based at two small hospitals highlight a few keys to earning financial incentives and improving community health.

Between 2019 and 2022, Creston, Iowa-based Greater Regional Health produced nearly $3 million in population health revenue and reaped $870,000 in shared savings. Steven Reeves, MD, the ACO’s physician representative, said making optimal use of the Medicare annual wellness visit was crucial to those returns.

“So much flows through that,” Reeves said.

Many patients who are seen on those visits can benefit from chronic-care management or care coordination, another focus of the facility’s ACO operations.

For example, one of Reeves’s patients was diagnosed with severe lumbar spinal stenosis. With the patient lacking a ride, the ACO’s care coordinators arranged for transportation to a neurosurgery appointment 70 miles away. They also scheduled follow-up appointments with primary care and physical therapy, and they made initial contact with a local post-acute care facility in case the patient would require care in such a setting.

“We’re improving the health of this individual,” Reeves said. “We have definitely decreased her ER visits, so there is a cost savings there.”

And if Greater Regional Health were not in the MSSP?

“If we were not in the ACO, this [coordination] would not exist,” Reeves said. “That’s as bluntly as I can put it. What we would have then would be somebody using the ER inappropriately and moving down the path of not being able to walk, and we just would not be able to intervene.”

The care coordinators also provide a connection to community resources that can help patients address the social determinants of health, especially food insecurity and lack of transportation.

Coordination proves crucial

Care coordination similarly is a cog in the ACO operation at Sullivan County Community Hospital (SCCH), an Indiana facility that since 2018 has produced more than $1 million in population health revenue, with $600,000 in shared savings through the MSSP.

The first key to a successful care coordination initiative is administrative buy-in, said Michelle Franklin, the hospital’s CEO.

“Luckily, I’m a nurse by background, so I just have a different take on things,” she said.

SCCH hired a population health nurse, as required, when it joined the MSSP in 2015 and now has a staff of 15 dedicated to ACO activities. Those activities have expanded beyond the Medicare annual wellness visit to include community health, perinatal navigation, post-acute care navigation and more. Care coordination services also are available to patients who have commercial insurance.

A potentially overlooked part of the ROI from ACO participation is granular insight into a hospital’s cost drivers.

“Being involved in an ACO just gives you a different perspective about your claims,” Franklin said. “You can track your performance against all sorts of benchmarks and know that if you have a high ER spend, then you can drill down and see that you have a list of 10 or 15 patients maybe who are driving that high ER utilization. And so, your efforts on capturing those people and getting some sort of control around them and maybe utilizing some utilization review [and] some case management services around those high utilizers are a great way to go.

“We’re not asking our providers to do a check on those people or try to help control the costs. We’re shifting that to care coordination and making sure that those [staff] are looking at those high utilizers and trying to implement solutions around those.”


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