Medicare Shared Savings Program Adds New ACOs for 2015

CMS' Sean Cavanaugh announces in a blog post that 89 newcomers will participate in 2015. But ACOs remain a work in progress, with rule changes on the way and some discussion about whether these entities are assuming enough risk or dampening competition in certain markets.

Another 89 accountable care organizations (ACOs) will join CMS’ Medicare Shared Savings Program starting January 1, 2015, bringing the program to 405 participants, even as the number of ACOs in the original Pioneer program has declined since its launch.

Sean Cavanaugh, deputy administrator and director, Center for Medicare, announced the new arrivals in a blog post yesterday. Cavanaugh said that with the additional participants, the Shared Savings Program will surpass 7.2 million beneficiaries next year; when combined with Medicare recipients in the Pioneers, the total will reach 7.8 million in 424 ACOs.

ACOs, created under the Affordable Care Act (ACA), are groups of hospitals, doctors, pharmacies, and other healthcare providers aligned to provide care for special groups of patients, which make up its “population.” ACOs are the vehicle for delivering the “triple aim” sought under healthcare reform of better population health, improved patient satisfaction, and a reduction in the trajectory of healthcare spending.

The ACO configuration is a means to move away from the “fee-for-service” model that pays each part of the healthcare chain, even if the patient does not get better. Instead, ACOs and the Medicare Shared Savings Program aim to reward value-based care, which reduces unnecessary procedures, hospital and physician errors, infections, unnecessary readmissions, and poorly coordinated care that needlessly drives up costs.

Thus, as an incentive, “ACOs can share in any savings they generate for Medicare, if they meet specified quality targets,” Cavanaugh wrote yesterday.

But how much risk ACOs in the Shared Savings Program have been willing to assume has been a subject of debate. Some observers wonder if these entities are serving to consolidate healthcare markets at the expensive of small practices, especially in fields like oncology which have peculiar financial challenges. The loss of competition in some markets will not help drive down costs, and in fact will leave consumers with fewer options, critics argue.

While Medicare is a dominant player in the ACO scene, it is not the only one. And, according to a just-published study in The American Journal of Managed Care, it is far from the most inventive. Authors who issued the first in-depth analysis of contracting practices for ACOs wrote that while commercial payers may represent a smaller share of the contracts, these agreements tend to be more innovative, with providers more likely to assume double-sided risk. The lack of enough “down side” in the Medicare Shared Savings Program, as well as recent steps to push out penalties for not meeting targets, has been a criticism of the initiative.

Cavanaugh, however, pointed to 2013 data that show the overall movement to value-based care is changing healthcare for betterment of patients. Safety improvements were credited with 50,000 fewer deaths, 1.3 million fewer patient harms, and $12 billion in avoided health care spending. “Recent research implies that many of these reforms may be generating savings in the private sector as well,” he wrote. And, per capital spending in Medicare is flat, while overall healthcare spending continues to climb a lower rates than before the ACA.

Cavanaugh was upbeat about the progress of ACOs yesterday. “We are starting to see promising results. This fall, we released the early findings from the ACOs who started the program in 2012. Shared Savings Program ACOs improved on 30 of the 33 quality measures in the first 2 years, including patients’ ratings of clinicians’ communication, beneficiaries’ rating of their doctors, and screening for high blood pressure,” he said.

“They also outperformed group practices reporting quality on 17 out of 22 measures. We are also seeing promising results on cost savings with combined total program savings of $417 million for the Shared Savings Program and the Pioneer ACO Model.”

In reality, the Pioneers, who were drawn from larger providers with more experience in value-based models, have seen mixed results. For starters, only 19 of the original 32 Pioneers remain in the program. And, as Evidence-Based Diabetes Management reported this month, recent results showed that Pioneers with the best performance on savings were in the lower half of the group in scores on meeting patients’ diabetes metrics, and vice versa.

As Cavanaugh noted in his post, CMS has published a proposed rule to clarify guidelines for the Shared Savings Program. “We are looking forward to receiving comments from ACOs, beneficiaries, and their advocates, providers, and other stakeholders interested in seeing the ACOs succeed long-term,” he wrote.

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CMS Blog Post and List of 89 New Participants in Medicare Shared Savings Program