Committee for a Responsible Federal Budget

Mixed News for ACOs in CMS' Latest Update

Sep 17, 2014 | Health Care

The Centers for Medicare and Medicaid Services released some mixed news on Tuesday for health care reformers -- the results of two different Medicare Accountable Care Organization (ACO) programs in 2013. Twenty-three Pioneer ACOs and 220 ACOs in the Medicare Shared Savings Program (MSSP) generated somewhat modest savings of $372 million for Medicare while qualifying for shared savings payments of $445 million. Both programs performed better on quality benchmarks and patient experience compared to fee-for-service (FFS) Medicare. ACOs are one model that many reformers hope will provide a path forward for better coordinated, higher quality, and more affordable care delivery.

The Pioneer ACOs involve organizations and providers that are more experienced in coordinating care, so they are already on the second year of the program and have more ambitious savings targets. The Pioneers may share in savings if they exceed those targets but also face risk if they fail to meet them, unlike most MSSP ACOs. Overall, Pioneer ACOs saved $96 million, $41 million for the Medicare trust funds, and qualified for $68 million of shared savings payments. Eleven of the 23 ACOs qualified for those payments, while 3 had losses. The per-capita spending growth rate among Pioneers came in 0.45 percentage points below the fee-for-service rate. In addition, the mean quality score increased by 19 percent, with organizations improving quality in 28 of 33 measures by an average of 15 percent, and improving patient and caregiver experience in six of seven measures. In the third year of the demonstration, Pioneer ACOs that achieved savings in the first two years can move to a population-based payment arrangement, in which ACOs would get a monthly per-beneficiary payment in advance.

Fifty-three successful ACOs in the larger Medicare Shared Savings Program in total held spending $652 million below its spending targets in its first year and qualified for about $304 million of shared savings payments. In total, the ACOs saved the Medicare trust funds $345 million. The ACOs improved on 30 of 33 quality measures and outperformed fee-for-service providers on 17 of 22 comparable performance measures.

The Pioneers got off to a somewhat mixed start last year, as nine ACOs left the program (seven going to MSSP) after they did not achieve savings. The savings totals are similar to last year, but quality measures improved significantly. It is early in the Medicare ACO experiment, but at least on the quality front, there seems to be some promise judging by the first couple years of results. To improve on cost control, many proposals exist (including those from the Bipartisan Policy Center and Brookings Institution) to give ACO providers stronger tools to steer care to the highest quality amd most efficient settings, and to reward beneficiaries for better choices.