Why Accountable Care Organizations May not Succeed in MSSP

June 02, 2016 - Do accountable care organizations (ACOs) truly save costs for the healthcare industry? Or is forming an ACO in hopes of cutting spending a pipe dream? Last year’s results from the Medicare Shared Savings Program (MSSP) showed little positive change for financing hospitals and clinics. The National Association of ACOs (NAACOS) reported in a press release that it is “disappointed but not surprised” at 2015 results from the Medicare Shared Savings Program.

A mere 92 out of 333 accountable care organizations under the Medicare Shared Savings Program will obtain some reimbursement for their investment while the average savings per ACO dropped significantly.

The problem at hand may be that the Centers for Medicare & Medicaid Services (CMS) penalizes accountable care organizations for any quality benchmark that did not reach optimal levels, said Clif Gaus, CEO of the National Association of ACOs.

“Savings per ACO decreased. This is probably due to the unfair quality penalty which is so stringent that unless an ACO scores perfectly on every quality measure, their savings will be reduced,” Gaus stated in the press release. “We expect ACOs to deliver better care for Medicare beneficiaries but the quality benchmark that CMS prescribes is the government example of letting the perfect be the enemy of the good.”

Over the last several years, hundred of medical organizations invested their time and money in operating through accountable care organizations. While these facilities put in more than $1.5 billion, the savings generated only $656 million in return.

One problem with the Medicare Shared Savings Program is that CMS does not allow additional accountable care organizations to share in the cost savings it produced due to their slightly lower performance benchmark results. NAACOS stated that there were at least 89 accountable care organizations that fell into this bracket.

One of the biggest issues may be that CMS tends to retain more of the cost savings and pass on fewer to the underlying ACOs. For instance, ACOs are required to meet a Minimum Savings Rate of 2 to 3.9 percent before taking part in any cost sharing.

“This is not a sustainable business model for the long-term future,” Gaus continued. “With Medicare cost growth at a record lows, now is the time for the government to invest in and support a national effort for population-based coordinated care and not just take, or be satisfied with, savings from a minority of ACOs at the risk of the majority of ACOs abandoning the program.”

NAACOS outlines certain steps that the federal government and CMS can take to ensure that more accountable care organizations share in cost savings and stay in the Medicare Shared Savings Program for the long-term.

First, it is important to bring greater stability to the population that accountable care organizations are responsible for. Primary care physicians operating through ACOs will also need to strengthen their relationships with Medicare beneficiaries whose health they’re managing.

Additionally, CMS and the federal government will need to consider the fact that some communities struggle much more in achieving these cost savings. When it comes to scoring quality performance benchmarks, it is beneficial to reduce the number of penalties and integrate financial incentives when quality improvements are achieved.

“ACOs remain the most promising solution to improving quality and lowering healthcare costs and we hope to work with the Administration to make adjustments to the program so that more ACOs can financially survive and grow in number,” Gaus concluded.

An opinion piece from The Philadelphia Inquirer stated that, in the current healthcare delivery system, accountable care organizations do not have the ability to achieve the goals established by the Medicare Shared Savings Program. First, it does not work when regional Medicare cost growth is compared to national rates, as each state and community functions differently and Medicare spending varies greatly.

Research even shows that only about $144 per Medicare beneficiary was saved among the accountable care organizations that joined the Medicare Shared Savings Program in 2012.

So do ACOs work when it comes to cutting Medicare spending? Currently, the results may not be as favorable as hoped, but the future may show a different picture. ACOs that pursue risk-based contracts and put in the time necessary to see real savings may find their commitment produces better results over the long-term.

“ACOs with more experience in the program were more likely to generate shared savings.  Among ACOs that entered the program in 2012, 37 percent generated shared savings, compared to 27 percent of those that entered in 2013, and 19 percent of those that entered in 2014,” CMS stated in their findings.

“Shared Savings Program ACOs that reported in both 2013 and 2014 improved on 27 of 33 quality measures. Quality improvement was shown in such measures as patients’ ratings of clinicians’ communication, beneficiaries’ rating of their doctor, screening for tobacco use and cessation, screening for high blood pressure, and Electronic Health Record use.”

If the federal government and ACOs work together to pursue real solutions that address some of these challenges, the future may bring more opportunities to share in cost savings between both parties.

Dig Deeper:

How CMS Could Boost Operation of Accountable Care Organizations

CMS Released Proposed Rule for Accountable Care Organizations