TripleTree has been following and writing about healthcare payment reform programs over the past few years. While fast-growing initiatives like bundled payments are taking up an increasing amount of mindshare and discussion, we recently found ourselves wanting an update on how Accountable Care Organizations (ACOs) are doing. Luckily, we received an update in the last few weeks from the 2014 Medicare ACO programs’ results. How the programs are doing, however, seems to be more of a judgment call rather than a fact.
According to CMS, Medicare ACOs are improving care quality and generating shared savings. CMS stresses that roughly 350 ACOs generated more than $400 million in savings to our healthcare system. However, when you dig into the numbers a bit deeper, it appears that only about 100 of the ACOs actually created savings, while the rest all broke even or did worse. This begs the question, how successful is the CMS ACO program? It depends on who you ask.
One publication reported on the press release by noting that few Medicare ACOs actually earned bonuses in 2014, saying that “three out of four [ACOs] did not slow health spending enough to earn bonuses… a continuation of mixed results.” In fact, by digging into the actual data for the larger of the two Medicare ACO programs, it appears that while the top performers did generate significant savings, CMS actually paid out more in shared savings to this top group ($341 million) than the overall group generated in actual reduced spending below benchmarks ($291 million).
Various provider systems, on the other hand, took the opportunity to trumpet their successes.
Given these results and facts, we dug into the data to see what, if anything, the details tell us about the program and its top performers. Not surprisingly, some of the largest ACOs showed up as top performers in terms of total earned payments, with Memorial Hermann earning nearly $23 million in shared saving payments from CMS. Oakwood ACO outperformed its relatively small size to earn inclusion in the top 5.
When we normalized for size of beneficiary population, RGV ACO had the highest shared savings per beneficiary, with over $950 per head. It is interesting to note that RGV was one of only a small handful of participants in the more onerous “Track 2” program, where participating ACOs could owe CMS a refund if it fails to generate savings.
Finally, on a percentage of savings basis, small ACOs once again performed well, with the best performers generating savings against benchmark spending of roughly 15%. The data also appears to illustrate that at least one high performing program did not generate any earned payments from CMS, presumably because it failed to meet minimum quality reporting standards.
In any case, the fairest interpretation here is probably one of mixed results. The Advisory Board Company wrote a summary post detailing some of the highs and lows of the results, and ultimately concluded that “the ACO programs are probably achieving what they need to” in terms of helping health systems learn how to manage risk and to engage in more community-based care.
TripleTree will continue to watch the alternative payment model evolution with a lot of interest. Let us know what you think.