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Analysis

Medicare Shared Savings ACOs Generated $1.7B in Savings in 2018

By John Commins  
   October 01, 2019

Of the 548 ACOs that cared for 10.1 million beneficiaries, 66% saved money and 37% saved enough money to earn bonuses.

The Medicare Shared Savings Program generated $1.7 billion in total savings in 2018, the Centers for Medicare & Medicaid Services said this week.

Of that, Medicare netted $739 million, after paying out shared savings bonuses, and collecting shared savings loss payments from ACOs that participated in the Pathways to Success Shared Savings Program, CMS Administrator Seema Verma said in a commentary posted in Health Affairs.

"ACOs that received shared savings payments had decreases in inpatient, emergency room, and post-acute care spending and utilization, while ACOs that increased spending relative to their targets tended to show increases in these areas," Verma said.

ACOs in the shared savings and risk-based models saw reductions in per-enrollee spending. However, ACOs that took on downside risk generated more savings than ACOs that did not, with an average $96 reduction in spending per enrollee, compared with $68 per enrollee in ACOs that did not take on risk.

"This trend is one of the reasons that the greater accountability for ACOs included in Pathways to Success, along with greater flexibility for them to innovate, will lead to better, more efficient care for Medicare beneficiaries," Verma said. 

Among the highlights singled out by Verma:

  • ACOs led by physicians, which are generally "low revenue", continued to outperform hospital-led ACOs, which tend to be "high-revenue" and which provide inpatient and outpatient services.
     
  • Low-revenue ACOs in 2018 saw an average reduction in spending relative to targets of $180 per beneficiary, compared to just $27 for high-revenue ACOs.
     
  • ACOs had an average quality score of almost 93%;
     
  • ACOs that joined the program in 2016 or 2017 improved their quality measure performance by an average of 27% in 2018;
     
  • ACOs that earned shared savings retained an average of 48% of their generated savings;
     
  • ACOs in their second contract period saved more than twice as much per beneficiary compared to ACOs in their initial contract period.

Clif Gaus, president and CEO of the National Association of ACOs, said CMS' findings "put to rest any notion that ACO savings are 'modest' and illustrate the strong performance of the leading Medicare alternative payment model."

"Given time, we know ACOs save money and provide benefit for patients and taxpayers," he said.

The robust savings generated by the program comes amid fears that enthusiasm is cooling with ACOs.

CMS released the 267-page final rule for Pathways to Success under the Medicare Shared Savings Program in late December, and announced that applications to participate in the program would be due in February.

NAACOS and other stakeholders in January had asked CMS to extend by at least one month the application deadline..

CMS reported in July that only 518 ACOs are currently in the program, a decline from 2018 participation rates. 

"Recent data from CMS indicate a potential drop in ACO participation. Today’s results prove the Shared Savings Program was doing very well before last year's changes by CMS," Gaus said.

NAACOS has also challenged the metric to measure ACO savings. Rather than relying on CMS-set benchmarks, NAACOS said Medicare should use "counterfactual" data "that compares Medicare spending to what spending would be like in the absence of ACOs."

"Researchers at Harvard University, the Medicare Payment Advisory Commission and NAACOs have all done such work. All showed ACOs are lowering Medicare spending by 1% to 2%, which translates into tens of billions of dollars of reduced Medicare spending when compounded annually," NAACOS said.    

“ACOs that received shared savings payments had decreases in inpatient, emergency room, and post-acute care spending and utilization, while ACOs that increased spending relative to their targets tended to show increases in these areas.”

John Commins is a content specialist and online news editor for HealthLeaders, a Simplify Compliance brand.


KEY TAKEAWAYS

ACOs in the shared savings and risk-based models saw reductions in per-enrollee spending.

ACOs that took on downside risk saw an average $96 reduction in spending per enrollee, compared with $68 per enrollee in ACOs that did not take on risk.

Low-revenue ACOs saw an average reduction in spending of $180 per beneficiary, compared to $27 for high-revenue ACOs.


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