CMS Reports Latest ACO Performance Results Demonstrate Continuing Success

CMS announced that 2014 quality and financial performance results demonstrate the power of coordinated health care delivery via Affordable Care Organizations (ACOs). The performance data reveals more than $411 million was saved by 20 Pioneer and 333 Shared Savings Program ACOs and 97 ACOs qualified for an aggregate of $422 million in shared savings payments by meeting required thresholds for quality and savings. "These results show that accountable care organizations as a group are on the path towards transforming how care is provided," said CMS Acting Administrator Andy Slavitt in a statement. "Many of these ACOs are demonstrating that they can deliver a higher level of coordinated care that leads to healthier people and smarter spending."

Factors considered in evaluating ACO performance include how patients rate their physicians, "how well clinicians communicated," whether certain screenings are performed and how they use electronic health records. Pioneer ACOs improved in 28 of 33 quality measures and Shared Savings Program ACOs improved on 27 of 33 quality measures.

Pioneer ACOs have demonstrated steadily increasing success with $120 million in savings for the third performance year of that ACO model, a significant increase from the prior years' $96 million, and $88 million in the first performance year. Only five Pioneer ACOs generated losses, with only three of those losing enough to owe shared loss payments to Medicare totaling $9 million.

For example, Montefiore Health System reported 3.6 percent in gross savings for its Pioneer ACO in 2014 and achieved a quality score of 86.21 percent, with overall quality scores rising 10 percent from the prior year. Banner Health Network announced it experienced its "best-ever result" in its third performance year, reporting it exceeded predicted benchmarks by $29 million in savings, yielding a 5 per cent savings in cost of care for 2014. It also raised its quality score almost 10 percent from the prior year.

These results bear out predictions in G2 Intelligence's report Laboratory Services in Accountable Care Organizations which reported "Medicare Pioneer ACOs that generated savings in the first year reported greater savings in the second year, suggesting that successful ACOs will likely become more effective over time."

Among Shared Savings Program ACOs, 92 ACOs controlled spending enough to qualify for an aggregate of $341 million in performance payments and the program saved Medicare $465 million. No ACOs in the second phase, which includes financial risk sharing, owed any loss payments to CMS.

Predicting further growth in its ACO programs, CMS notes that as of January 1, 2015, there were more than 420 Medicare ACOs serving in excess of 7.8 million beneficiaries. G2 Intelligence's report similarly predicts increasing ACO penetration noting historically steady growth "from 46 [ACOs] in 2010 to 664 in August 2014."

For further assessment of the ACO market landscape, the outlook for future growth and the laboratory's role in ACOs, see G2 Intelligence's report Laboratory Services in Accountable Care Organizations.

Takeaway: Data on performance of ACOs continues to emphasize benefits of coordinated care and ability to provide cost savings.