Some accountable care organizations (ACOs) are achieving their goal of saving Medicare money while improving the quality of care they offer, the Centers for Medicare and Medicaid Services (CMS) said Jan. 30.
In its first report on the operation of Medicare’s ACO program, CMS said the entities shared in $273 million of savings in 2012 and funneled an additional $128 million to the Medicare trust fund.
In a statement, the agency said interim financial results for the Medicare Shared Savings Program (MSSP) ACOs show that in their first 12 months, nearly half (54 out of 114) of the ACOs that started operations in 2012 already had lower expenditures than projected.
Of the 54 ACOs that exceeded their benchmarks in the first 12 months, 29 generated shared savings totaling more than $126 million, the agency said.
Under the program, ACOs that meet certain targets can share in savings. Thus, the 29 ACOs will share in the $126 million in savings they generated. The agency also said Pioneer ACOs “generated gross savings of $147 million in their first year while continuing to deliver high quality care.”
“Results showed that of the 23 Pioneer ACOs, nine had significantly lower spending growth relative to Medicare fee for service while exceeding quality reporting requirements. These savings far exceed findings from a previous analysis conducted by CMS, which used a different methodology,” CMS said.
The Pioneer program is administered under CMS’s Center for Medicare and Medicaid Innovation and is designed for health-care organizations and providers that have experience coordinating care for patients across care settings. The program allows those provider groups to move more rapidly from a shared savings payment model to a population-based payment model on a track consistent with, but separate from, the MSSP.
Thirty-two Pioneer ACOs participated in the first year of the program, yet only 13 performed well enough against cost benchmarks to share in savings for the program. After the first year, seven of the Pioneers decided to transition to the “traditional” MSSP, while two left the program entirely.
Accountable care organizations “are designed to achieve savings over several years, not always on an annual basis, but this is a very strong start,” said CMS.
ACOs aim to improve the quality and lower the cost of health care through several mechanisms, such as disease management programs, care coordination, and the alignment of financial incentives for hospitals and physicians.
The Affordable Care Act created the MSSP for such entities. About 250 Medicare ACOs were established under the MSSP prior to 2014, and about half are physician-run. The initial terms of the ACO contracts were required to be at least three years, according to CMS. The agency in December announced the addition of 123 new ACOs, with a performance period that began Jan. 1.
CMS says ACOs now serve 5.3 million beneficiaries, or about 12 percent of the Medicare population.
Quality Improvements
The agency didn’t release information on the quality of care being offered by ACOs, but CMS Principal Deputy Administrator Jonathan Blum told reporters on a telephone conference call that ACOs “are doing better with quality metrics” than many other providers.
Blum said he expects ACOs will continue to improve in the coming years, generating more savings for themselves and Medicare. ACOs that didn’t perform well enough to share in savings likely will improve their performance by making changes in how they deliver care, including experimenting with new staffing models as well as making other investments, he added.
“We’re in this for the long term,” Blum said. “But what is impressive is the first-year results.”
The agency plans to release information on the individual performance of ACOs and their quality metrics at a future date, Blum said. Final results on the first year of the program will be released later this year, CMS said.
Takeaway: ACOs are already generating cost savings for the Medicare program, which means they are likely to continue growing. Labs should make sure they have a seat at the ACO table before they are shut out of shared savings.
