Why 2015 was the best year yet for Medicare ACOs

ACO’s Shared Saving financial figures show small changes from 2015 to 2014 HOWEVER, the overall benefits in improving patient outcomes and creating more valuable interaction between patients and providers continues to show great success among ACO groups.

September 6, 2016 by Healthcare Partnerships

CMS just released the 2015 results of its Pioneer and MSSP ACOs, and once again, the picture looks nearly the same as in previous years: around a third of all participants excelled and earned shared savings, while close to half weren’t as lucky and surpassed their spending benchmarks. But behind the raw financial results are new signs that the program is successfully urging providers to develop more quality-driven and cost-effective models of care.

The financial data itself shows very modest improvements compared to the previous year. Total savings for Medicare (from both Pioneer and MSSP models) rose to $466 million, up from $411 million in 2014, and the number of ACOs earning savings rose to 125 from 97, or roughly 31 percent of total participants compared to 27 percent previously. Roughly the same number of ACOs (83 to 89) in 2015 managed to spend less the benchmark without qualifying for bonuses.

While unimpressive taken as whole, performance differences between individual ACOs reveal that in its fourth year, some organizations demonstrated that years of experience in the program may be paying off. Of the ACOs that started in 2012, 42 percent managed to earn shared savings in 2015, as did 37 percent of those launching in 2013, compared to 21 and 20 percent for more recent arrivals. In addition, seven of the year’s top ten highest performers by total savings were ACOs that had participated in the MSSP since 2012 or 2013. Even among the ACOs that exceeded their cost benchmarks, only about 22 percent (42) were longtime MSSP members. 57 percent were first- or second-year ACOs. Most of the top-earning ACOs have not yet publicly commented on the specific reasons for their success so far, though some have in the past cited efforts such as encouraging a competitive spirit between physicians to improve patient outcomes and performance (Palm Beach ACO), prior physician experience with patient-centered medical homes and care coordination among nurses for high-risk patients (Hackensack Alliance), and a strong foundation of patient care data and thorough understanding of a patient population’s health needs (Advocate Physician Partners). The fact older ACOs are performing better suggests that it’s only a matter of time before their successful methods and strategies are adopted by other groups.

The latest ACO results also show patients continue to benefit from improved care quality. While often overlooked in the discussion of Medicare ACOs, quality is one measurement in which ACOs have consistently performed well. In 2015, MSSP ACOs demonstrated improvements in 84 percent of all reported quality measurements, especially in fall-risk screening, depression screening and follow-up, blood pressure screening and follow-up, and pneumonia vaccinations, with improvements of at least 15 percent in each category. Such screenings can significantly reduce spending over the long-term, and the improvements made in 2015 are a promising indicator of the program’s success in the absence of any recent quality comparisons to control groups.

Top 10 MSSP ACOs by Shared Savings Earned, 2015 ($M)

ACOs as a whole will likely perform better in future years, thanks to upcoming changes in CMS’ benchmarking system, though not every ACO will immediately benefit. CMS announced in April 2016 that benchmarks will be adjusted to reflect regional rather than national cost averages, giving a more realistic cost goal for ACOs and removing an obstacle currently facing historically high-performing groups. Unfortunately, while the updated system will apply to new applicants starting in 2017 and ACOs who started during or later than 2014, early adopters will not be able to take advantage of the new system until 2019 because CMS determined the transition would be too disruptive. In the meantime, Medicare ACOs will likely improve on the average slowly but steadily over the next few years.