First-Year Data Mixed for Medicare Shared-Savings ACO

Marcia Frellick

April 14, 2016

Data from the first full year of the Medicare Shared Savings Program (MSSP), the largest of the Medicare accountable care organizations (ACOs), showed mixed results in 2012 and 2013, according to new research published online April 13 in the New England Journal of Medicine.

The first two groups of ACOs (220 in total) entered the MSSP either in mid-2012 or at the beginning of 2013. The ACOs that joined in 2012 cut spending by $238 million (1.4%) in aggregate (P = .02) with unchanged or improved quality of care compared with a control group of non-ACO providers in the same areas. However, the group of ACOs that joined in 2013 saw virtually no savings (only $3 less per beneficiary) in their first full year (P = .96).

In addition, because Medicare paid out $244 million in shared-savings bonuses to ACOs in the first two groups, the lower spending in the 2012 cohort was not enough to result in overall savings to Medicare.

In contrast with other ACOs, such as the Pioneer model, MSSP participants have one-sided risk and do not have to reimburse Medicare if spending exceeds the benchmark.

"These results suggest that ACOs with no downside risk can achieve savings, but that savings to Medicare and society may be slow to develop," lead author J. Michael McWilliams, MD, PhD, associate professor of health care policy at Harvard Medical School in Boston, Massachusetts, said in a university news release. "But the incentives for ACOs to lower spending are currently very weak, so savings may accelerate if the incentives are strengthened."

Dr McWilliams and colleagues analyzed the 2012 and 2013 ACO cohorts separately because the time the groups entered could affect chances for savings.

The researchers found that savings were larger in independent primary care groups than in hospital-integrated groups. They write about the possible reasons for this: "In particular, independent physician groups have stronger incentives to lower inpatient and hospital outpatient spending than groups integrated with hospitals because their shared-savings bonuses are not offset by forgone profits from reductions in hospital care."

They also found that ACOs in the MSSP with comparatively high spending for their region saw greater savings than ACOs with spending below the regional average, which suggests that ACOs with more opportunities to cut spending had an easier time doing so.

"This finding also confirms the importance of encouraging participation by high-spending organizations as [the Centers for Medicare & Medicaid Services] considers transitioning benchmarks for ACOs to average fee-for-service spending in their region," the authors write.

They note that they examined only 12 to 18 months of exposure to MSSP, and savings may grow with more time.

"Nevertheless," they write, "if meaningful savings from the expanding MSSP materialize, our findings suggest that they may be slow to develop, because participants with less advanced systems for managing care may enter later and require more time to improve care efficiency."

The study is supported by the National Institute on Aging of the National Institutes of Health and the Laura and John Arnold Foundation. Dr. McWilliams reports grant support from the National Institute on Aging and the Laura and John Arnold Foundation during the conduct of the study and personal fees from the Medicare Payment Advisory Commission outside the submitted work. One coauthor reports grant support from the Laura and John Arnold Foundation and the National Institute on Aging during the conduct of the study and other support from VBID Health, LLC, outside the submitted work. Another coauthor reports grant support from the National Institute on Aging during the conduct of the study. Another coauthor reports personal fees from United Biosource and the Research Triangle Institute outside the submitted work. Another coauthor reports grant support from the National Institute on Aging/National Institutes of Health during the conduct of the study and personal fees from the Medicare Payment Advisory Commission outside the submitted work.

N Engl J Med. Published online April 13, 2016. Full text

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