Recently, CMS sent out press releases touting over $1 billion in savings from Accountable Care Organizations. Here’s the tweet from Andy Slavitt, the acting Administrator of CMS:
The link in the tweet is to a press release. The link in the press release citing more details is to another press release. There’s little in the way of analysis or data about how ACOs did in 2015. So I decided to do a quick examination of how ACOs are doing and share the results below.
Basic background on ACOs
Simply put, an ACO is a group of providers that is responsible for the costs of caring for a population while hitting some basic quality metrics. This model is meant to save money by better coordinating care. As I’ve written before, I’m a pretty big fan of the idea — I think it sets up the right incentives, and if an organization does a good job, they should be able to save money for Medicare and get some of those savings back themselves.
ACOs come in two main flavors: Pioneers and Medicare Shared Savings Program (MSSP). Pioneers were a small group of relatively large organizations that embarked on the ACO pathway early (as the name implies). The Pioneer program started with 32 organizations, and only 12 remained in 2015. It remains a relatively small part of the ACO effort and for the purposes of this discussion, I won’t focus on it further. The other flavor is MSSP. As of 2016, the program has more than 400 organizations participating and as opposed to Pioneers, has been growing by leaps and bounds. It’s the dominant ACO program – and it too comes in many sub-flavors, some of which I will touch on briefly below.
A couple more quick facts: MSSP essentially started in 2012 so for those ACOs that have been there from the beginning, we now have four years of results. Each year, the program has added more organizations (while losing a small number). In 2015, for instance, they added an additional 89 organizations.
So last week, when CMS announced having saved more than $1B from MSSPs, it appeared to be a big deal. After struggling to find the underlying data, Aneesh Chopra (former Chief Technology Officer for the U.S. government) tweeted the link to me:
You can download the Excel file and analyze the data on your own. I did some very simple stuff. It’s largely consistent with the CMS press release, but as you might imagine, the press release cherry-picked the findings — not a big surprise given that it’s CMS’s goal to paint the best possible picture of how ACOs are doing.
While there are dozens of interesting questions about the latest ACO results, here are five quick questions that I thought were worth answering:
How many organizations saved money and how many organizations spent more than expected?
How much money did the winners (those that saved money) actually save and how much money did the losers (those that lost money) actually lose?
How much of the difference between winners and losers was due to differences in actual spending versus differences in benchmarks (the targets that CMS has set for the organization)?
Given that we have to give out bonus payments to those that saved money, how did CMS (and by extension, American taxpayers) do? All in, did we come out ahead by having the ACO program in 2015 – and if yes, by how much?
Are ACOs that have been in the program longer doing better? This is particularly important if you believe (as Andy Slavitt has tweeted) that it takes a while to make the changes necessary to lower spending.
There are a ton of other interesting questions about ACOs that I will explore in a future blog, including looking at issues around quality of care. Right now, as a quick look, I just focused on those five questions.