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Medicare ACOs Saved $411M in 2014, But Few Earned Bonuses

Results disappoint national ACO group

Medicare accountable care organizations (ACOs) generated $411 million in savings in 2014, but few of the Pioneer and Medicare Shared Savings Program (MSSP) ACOs qualified for bonuses in the second year of the program, according to data from the Centers for Medicare & Medicaid Services (CMS).

Only 97 of the 333 MSSP ACOs and 20 Pioneer ACOs qualified for shared savings payments of more than $422 million by meeting quality standards and their savings thresholds. The results indicate that ACOs with more experience in the program tend to perform better over time, according to a CMS fact sheet.

The financial results came as a disappointment but were not a surprise to the National Association of ACOs (NAACOS). The total dollar savings increased because more than 100 additional ACOs joined the program, but the data show that the average savings per ACO actually declined significantly, Clif Gaus, chief executive officer of NAACOS, said in a press release.

“Savings per ACO decreased,” Gaus pointed out. “This is probably due to the unfair quality penalty, which is so stringent that unless an ACO scores perfectly on every quality measure, their savings will be reduced. We expect ACOs to deliver better care for Medicare beneficiaries, but the quality benchmark that CMS prescribes is the government example of letting the perfect be the enemy of the good.”

Hundreds of organizations with thousands of doctors, hospitals, and other health care providers have invested more than $1.5 billion in the ACO program to date, but they have received only $656 million in return. The CMS, on the other hand, has received more than $848 million in savings for a small investment.

“This is not a sustainable business model for the long-term future,” Gaus said. “With Medicare cost growth at a record low, now is the time for the government to invest in and support a national effort for population-based coordinated care and not just take, or be satisfied with, savings from a minority of ACOs at the risk of the majority of ACOs abandoning the program.”

NAACOS was especially concerned that 89 additional ACOs contributed to the program’s savings, but government rules do not allow them to share in the savings they produced. The minimum savings rate (MSR) requirement of 2.0% to 3.9% allows an even greater savings retention by the CMS at the expense of ACOs, Gaus said. In addition, 241 ACOs will receive no return on their investment.

Gaus estimated that 40 to 50 ACOs will leave the MSSP this year.

Sources: FierceHealthcare; August 26, 2015; and NAACOS; August 25, 2015.

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