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Accountable Care Organizations Cut Medicare Spending by $836M

Three of four Medicare accountable care organization programs generated net savings for the Medicare Trust Fund, an analysis showed.

Accountable care organizations and Medicare spending

Source: Thinkstock

By Jacqueline Belliveau

- Accountable care organizations (ACOs) decreased Medicare spending by $836 million in 2016, new data from CMS revealed.

As a result, the organizations from four Medicare ACO programs returned about $70.6 million in healthcare savings to the Medicare Trust Fund, according to an analysis by the Health Care Transformation Task Force. The programs included the Medicare Shared Savings Program (MSSP), Pioneer ACO model, Next Generation ACO model, and Comprehensive End-Stage Renal Disease (ESRD) Care initiative.

“These results demonstrate the promise of new models of care delivery and financing for improving patient outcomes and reducing spending,” stated David Lansky, Health Care Transformation Task Force Chair. “This provides further evidence that we need more, not less, public and private sector investigation of alternatives to traditional fee-for-service medicine.”

Specifically, the MSSP, Medicare’s largest ACO program, saved the federal healthcare program a total of $652 million in 2016.

Over one-half (56 percent) of MSSP ACOs cut their healthcare spending and about 31 percent of ACOs earned shared savings payments.

READ MORE: Accountable Care Organizations Grow, But Face New Challenges

Although the ACO program paid organizations more in shared savings reimbursements than the program received in net returns, researchers pointed out.

Medicare’s newest ACO program, the Next Generation model, generated net savings to Medicare of $63 million in the program’s first year, with Next Generation ACOs saving $48 million overall.

Out of the 18 participants in 2016, 11 Next Generation ACOs reduced their Medicare costs enough to receive shared savings payment from CMS.

The Pioneer ACO model also produced net savings for Medicare, researchers reported. In the model’s fifth and final performance year, the eight Pioneer ACOs saved $61 million in total, producing net savings of $23 million for the federal healthcare program.

Six Pioneer ACOs also reduced Medicare costs below their spending benchmarks and earned shared savings payments.

READ MORE: The Future of Accountable Care Organizations Involves Risk

Additionally, Medicare’s Comprehensive ESRD Care model revealed that specialty ACOs can produce healthcare savings just as well as more general models, like the MSSP and Next Generation ACO programs.

All 13 ACOs in the model generated savings, totaling $75 million in 2016. The net savings to Medicare was $23.9 million.

All but one Comprehensive ERSD Care ACO received shared savings payments from Medicare.

Health Care Transformation Task Force members and Medicare ACO program participants shared how their organizations reduced healthcare costs and earned shared savings payments in 2016.

Barbara Walters, DO, Executive Vice President and Chief Population Health Officer of Task Force member Trinity Health explained that a long-standing history of accountable care helped Medicare ACOs earn shared savings payments.

READ MORE: Understanding the Value-Based Reimbursement Model Landscape

“It is important to note the performance results demonstrate that – on average – both savings and quality are improved the longer an ACO participates in the program,” she said. “As organizations move down the learning curve and benefit from the substantial investments in delivery transformation, we see our performance continue to improve.”

Recent research from the Office of the Inspector General (OIG) supported claims that longer ACO program participation led to greater savings. The study of MSSP ACOs found that 57 percent of the organizations in the program for three years reduced costs below their spending benchmarks, compared to just 46 percent of organizations in the program for one year.

MSSP ACOs in the program for at least three years also decreased costs by an average of $10.1 million per organization in 2015. In comparison, MSSP ACOs just starting the program only cut costs by an average of $5.4 million per organization.

Health Care Transformation Task Force member and Pioneer ACO, Atrius Health, showed that mature organizations may produce greater savings because the organizations reinvest their savings into understanding their patient populations and developing improved care delivery models.

Atrius Health’s Senior Vice President of Population Health Richard Lopez, MD, explained that the organization increased savings to Medicare in each of the five years as a Pioneer ACO. The organization used its savings under the ACO program to invest in care coordination, staff training, data analytics, health IT, and other resources for Medicare beneficiaries and other patients.

“By knowing our patients well, we are able to provide the right coordinated care that keeps them healthy in the comfort of their homes,” he stated. “As we continuously strive to innovate care delivery to improve quality, access and convenience, we are delighted to see these efforts reflected in a quality score of over 95 percent. We are proud to help our patients lead happier, healthier lives and look forward to continuing this work.”

In addition to earning high quality scores, Atrius Health saved Medicare $10.4 million in 2016, receiving $6.8 million back in savings.

Additionally, ACOs in the Health Care Transformation Task Force attributed success to the ACO’s structure of managing care across the continuum, rather than in piecemeal.

“The ACO helps to unify our enterprise by bringing together primary care, specialty care and independent participating physicians,” explained James Gutierrez, MD, Cleveland Clinic ACO’s President and Medical Director. “The care model is further enabled to manage our patient populations across the whole continuum of care. This validates the work we have done in recent years to provide outstanding quality of care while being better stewards of healthcare resources.”

Arizona Care Network, a physician-led MSSP Track 1 ACO, also pointed to improved care coordination as the reason for an 89.9 percent quality score and $5.78 million in savings this year.

“Our care coordination helps ensure that patients, especially the chronically ill, get the right care at the right time, with the goal of avoiding unnecessary duplication of services,” said the ACO’s CEO David Hanekom, MD. “This level of coordination is highly effective and reduces costs.”

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