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CMS Releases Medicare Shared Savings Program 2016 Results

Travis Broome
CMS just released 2016 data on the Medicare Shared Savings Program and the information proves that patience pays off, savings don't have to happen at the expense of quality, and that physician-led accountable care organizations are more successful.
Physician-led ACOs are more successful
The term ACO is very broad. The majority of ACOs include a hospital. Others are based around community health centers. A few are based on post-acute care settings. But the majority are the 226 ACOs with a hospital and the 134 ACOs with physicians only.

Nearly half (45%) of physician-only ACOs earned shared savings, while only 23% of ACOs that include a hospital earned shared savings. Even more telling is when you look at how those percentages compare to those ACOs that would have had to pay back losses had they been at risk. Only 13% of physician-only ACOs would have had to pay back CMS a ratio of more than 3:1. However, for every hospital ACO that exceeded the statistical threshold for savings, another hospital ACO had statistically higher costs.

From a policy perspective, CMS should be looking for opportunities to support greater participation by independent physicians in the ACO program. The Advanced Payment and Investment Models have been effective at supporting the start-up costs for physician-only ACOs and those in rural areas. Calibrating downside risk to the revenue of ACO participants (as in Center for Medicare & Medicaid Innovation's Track 1+ program) is critical to these ACOs advancing to 2-sided risk and should become part of the permanent MSSP program.

Risk adjustment throws a curveball
Another factor that suppresses the savings against benchmark for ACOs is the artificial capping of risk adjustment, which is unlike any other commercial or Medicare Advantage total cost of care risk arrangement. The risk scores for ACOs’ continuously enrolled populations did, in fact, go up for 49% of ACOs; however, due to regulation the benchmark did not go up. So, 51% of ACOs had their risk score go down and in this case the benchmark was lowered. This one-way movement suppresses the savings performance of ACOs when measured against benchmark. It also introduces significant uncertainty regarding whether ACOs efforts will go unrewarded due to shifts in patient population (eg, conducting greater outreach to sicker populations). Not recognizing actual changes in the morbidity of a population suppresses the actual savings ACO achieve.

The path forward
The most obvious lesson of 2016 is that patience is rewarded. Over time, population health initiatives pay off, and ACOs that cannot figure out implementation dropout freeing up their physicians to join other ACOs that can. MSSP administrative implementation itself has been a success story. CMS has been willing to learn from ACOs' experiences, to learn from the data, and to refine the program. That opportunity for improvement is as stark today as it has ever been. CMS has opportunities to make it easier for ACOs to weather the early years through more accurate benchmark methodologies that reflect changes in local healthcare markets and changes in the risk of populations. CMS also can match the right risk profile for different types of ACOs across all tracks.

Researchers have found that when Medicare beneficiaries in ACOs are compared to those that do not benefit from ACOs receive even more value than comparison against the MSSP benchmark shows. These benefits spread out across Medicare and indeed the health care industry. Lower FFS costs lead to lower Medicare Advantage rates which pushes Medicare Advantage plans to also embrace accountable care. Physicians who make the commitment to accountable care want data on all their patients so they seek out value-based contracts with their commercial payers and with Medicaid. Better benchmarks, better risk adjustment, and better 2-sized risk will move ACOs to 2-sided risk, advanced alternative payment models faster. The ACOs in turn will generate more savings for CMS and greater savings for across health care created more value for patients.

 
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