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September 6, 2017

Medicare Shared Savings ACOs cut spending by $1B over three years, OIG says

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Medicare Shared Savings Program (MSSP) ACOs cut spending by about $1 billion during the program's first three years, according to a new report from HHS' Office of Inspector General.

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Under MSSP, ACOs that reduce beneficiaries' Medicare expenditures by a set percentage below their benchmarks are eligible to keep a share of the savings. The formula, which was in effect until Jan. 1, 2017, considered providers' historical spending and national spending growth trends, among other factors.

In response to participants' concerns, CMS in June 2016 finalized a rule that changed the program's formula to one that compares ACO spending with trends in regional costs. The changes are applied when updating an ACO's benchmark for its second or subsequent three-year contract period, starting Jan. 1, 2017. ACOs that joined the program in 2012 or 2013 were not subject to the new methodology.

During the first three years, the 428 ACOs participating in the program served 9.7 million beneficiaries. When broken down by year, 220 ACOs participated in the 2013, 333 participated in 2014, and 392 participated in 2015—and just 36 ACOs opted out of the program over all three years. The percentage of Medicare beneficiaries treated by ACOs increased from 10 percent in 2013 to 19 percent in 2015, OIG said.

Key findings on cost

Overall, the report found 282 of the ACOs—about two-thirds of all the participating ACOs from 2012 to 2015—curbed spending for at least one of years they participated in MSSP. The remaining 146 participating ACOs did not cut spending, and each year they surpassed their spending benchmarks.

Of those participating ACOs that reduced spending, one-third cut spending substantially enough during the first three years to recoup some part of the savings they incurred, OIG found. According to OIG, those ACOs cut spending by about $2.8 billion from 2013 to 2015, resulting in roughly $1.3 billion in shared savings, or an average of $4.8 million per ACO for each year they qualified for shared savings.

The report also found that ACOs that have participated in MSSP for a longer period of time tended to perform better. When looking at 2015 alone, the report found that 57 percent of ACOs enrolled in the program for three years reduced spending, compared with 46 percent of ACOs participating for one year.

According to the report, a subset of particularly "high-performing" ACOs cut spending by an average of $673 per beneficiary between 2010 and 2015 for certain Medicaid services, with the largest spending reductions recorded in hospital inpatient care. In comparison, other ACOs increased spending by an average $707 per beneficiary and fee-for-service providers increased spending by an average of $673 per beneficiary.

Overall, the report found that ACOs cut spending by $3.4 billion during MSSP's first three years, with roughly half that total generated by just 36 ACOs. However, the ACOs that exceeded their benchmarks boosted spending by about $2.4 billion during that time period—meaning the net reduction in spending across all MSSP ACOs was $1 billion, according to OIG.

MSSP ACOs that received shared savings spent the funds on EHRs and other care improvement efforts, OIG found.

Key findings on care quality

OIG also found that 82 percent of ACOs in MSSP improved quality of care, as determined by 33 quality measures. Overall, OIG found participating ACOs' quality scores increased from 86 out of 100 in 2014 to 91 out of 100 in 2015. OIG further found that 74 percent of participating ACOs earned a quality score of at least 90 in 2015, compared with just 29 percent in 2014.

According to the report, ACOs demonstrated the most substantial improvement on quality measures for depression screening (from a median of 26 percent of beneficiaries screen in 2013 to 46 percent in 2015) and fall risk screening (from a median of 35 percent of beneficiaries screen in 2013 to 59 percent in 2015).

When compared with fee-for-service providers, the MSSP ACOs scored better than 81 percent of the 33 quality measures. For instance, ACOs performed better than 90 percent of fee-for-service providers on curbing hospital readmissions, and they performed better than 80 percent of fee-for-service providers on fall risk screening, depression screening and follow-up, and PCPs qualifying for EHR payments.


OIG in the report concluded, "While policy changes may be warranted, ACOs show promise in reducing spending and improving quality."

Clif Gaus, president and CEO of the National Association of ACOs, said in addition to showing gains in cost savings and quality improvement, the report demonstrated "a huge acceptance" of MSSP ACOs among participating physicians and hospitals.

Gaus also argued that the report indicates ACOs should be permitted to remain in one-sided risk contracts instead of two-sided risk contracts. According to Modern Healthcare, while the majority of ACOs in MSSP are in one-sided risk contracts, CMS restricts one-sided risk participation to two three-year contract terms, or six years overall (Livingston, Modern Healthcare, 8/29; Morse, Healthcare Finance News, 8/29).

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