Accountable Care Organizations: The Show So Far

The Medicare Shared Savings Program is intended to lower costs and improve quality. If program participants succeed in meeting these goals, they are able to share in the savings — calculated by comparison to expected Medicare FFS expenditures for the same population if folks were not enrolled in an ACO.

Many program participants have complained that the criteria for being able to share in the savings were too tough. and the latest version of the MSSP (ACO) regulations adding some flexibility in that department were finalized earlier this year. (See my post on the proposed ACO regulations; you may read the presser that links to the final version, too, as well as earlier posts on the ACO phenomenon.)

This week, CMS released data on ACO performance in 2014 (so the effects of the latest regs are obviously not reflected in this data). While the federales try to put a good face on it, the fact of the matter is that only about 1/4 of ACOs are in shared savings territory. The total savings (Pioneer ACOs and other MSSPs) only came to about $1B. One billion dollars sounds like a lot, but since the total Medicare spend is about $600B and about 15% of Medicare beneficiaries are enrolled in the MSSP program, that’s not a very impressive savings figure (it’s on the order of 1%, and does not demonstrate a sea change of the sort that we need).

The savings figures are inching up, and MSSPs (and, in particular, Pioneer ACOs) that have been at it longer seem to do better. However, a number of the Pioneer ACOs dropped out of the program, so even the more “advanced” participants are not uniformly delivering the best possible results.

There are certainly a number of alternative approaches to payment reform that have been floated, and CMMI continues to crank out new ideas, but there has been significant emphasis placed on the MSSP program as embodying CMS’s approach to value-based payment in the context of the broad effort to shift away from fee for service medicine.

One of the benefits of central planning on the scale of the Medicare program ought to be the ability to learn from successes, cull failures, and engage in an ongoing process of improvement. It seems that CMS is content to engage in watchful waiting at this point. (In theory, I believe that physician-led ACOs ought to be able to deliver better cost and quality improvements, but I have not seen data broken down by type of ACO in a way that would allow for confirmation of that hypothesis.)

It remains to be seen whether the revised regulations will allow MSSPs to deliver better results on the cost and quality fronts. Tune in again next year!

David Harlow
The Harlow Group LLC
Health Care Law and Consulting

Image credit: Colin Dunn via Flickr CC