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Even Upside-Only Medicare ACO Orgs Have Saved Money

Analysis  |  By Steven Porter  
   August 31, 2018

Data point to hundreds of millions of dollars in savings. Industry groups argue the real number is much higher.

Centers for Medicare & Medicaid Services Administrator Seema Verma announced with fanfare this week that the first cohort of Next Generation accountable care organizations saved some $62 million in their first year of operation.

Verma cited the data as "further evidence that ACOs succeed under two-sided risk," bolstering the agency's proposal to overhaul the Medicare Shared Savings Program (MSSP) next year in a way that would require participating ACOs to take on risk sooner than later, making them more like their Next Gen counterparts.

But fresh data CMS released quietly Thursday afternoon suggest that even the MSSP ACOs without downside risk have saved money. The data, which were published online without a press release, show that upside-only MSSP ACOs saved Medicare $291 million for 2012 through 2017 after accounting for bonuses paid to the ACOs, according to analysis released by the National Association of ACOs (NAACOS).

All MSSP ACOs combined, including upside-only and two-sided risk tracks, saved $314 million during that time frame, NAACOS said. (Most of the net savings came earlier, with net losses of $34 million each year in 2016 and 2017.)

"By the most conservative way to evaluate ACO performance using CMS benchmarks, today's results show … what we have been saying for years—that ACOs are saving Medicare hundreds of millions of dollars, and given sufficient time, one-sided ACOs will return significant savings to the trust funds," NAACOS President and CEO Clif Gaus, ScD, said in a statement Thursday.

In response to the Next Gen ACO data release on Monday, Gaus praised CMS for using "the gold standard" methodology to evaluate the model's performance, suggesting that a comparable evaluation of MSSP ACO data would reveal billions of dollars in savings. He echoed that sentiment Thursday.

"When evaluating savings by rigorous scientific methods as opposed to benchmarks, savings to Medicare by one-sided ACOs are magnitudes greater," he said.

Gaus and NAACOS aren't alone in questioning claims that MSSP has cost Medicare. J. Michael McWilliams, MD, PhD, a professor at Harvard Medical School and general internist at Brigham and Women's Hospital in Boston, said in a tweet Thursday that such claims are "frustratingly at odds with consistent findings & conclusions by academic research."

Aledade co-founder and CEO Farzad Mostashari, MD—who favors moving to two-sided risk "to help weed out ACO squatting"—said in a tweet that upside-only MSSP ACOs "more than held their own here." His best guess for how much upside-only MSSP ACOs saved last year is $1.5 billion, less $685 million in payments.

When asked by HealthLeaders for an apples-to-apples comparison of upside-only and two-sided risk models, a CMS spokesperson pointed to Table 14 in the notice of proposed rulemaking regarding the 2019 MSSP ACO overhaul. The table shows that the 410 upside-only MSSP ACOs in performance year 2016 cost Medicare $7 more per beneficiary, while their two-sided risk counterparts saved money.

"The same performance year 2016 data also show that ACOs produce a higher level of net savings and more optimal financial performance results the longer they have been in the Shared Savings Program and with additional participation experience," the proposed rulemaking notes.

Of the MSSP ACOs that began participating in 2012, 42% saved money in 2016. Of those that began in 2013 and 2014, 36% saved money in 2016. Of those that begin in 2015, 26% saved money in 2016. Only 18% of first-year MSSP ACOs saved money in 2016, according to the CMS proposal.

Verma reiterated her reading of the relevant data in a series of tweets shortly after noon on Friday.

"The 2017 results for Medicare’s ACO program continue to show the success of two-sided ACOs as compared to upside-only ACOs and reinforce CMS's commitment to the principles behind the 'Pathways to Success' proposal for ACOs, to accelerate the value-based transformation of America’s healthcare system," Verma said, with links to a press release and blog post released earlier this month. "We look forward to comments on our proposed rule."

Editor's note: This story was updated Friday afternoon to include a comment tweeted by CMS Administrator Seema Verma.

Steven Porter is an associate content manager and Strategy editor for HealthLeaders, a Simplify Compliance brand.

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