Modern Healthcare - CMS saved $739 million last year from Medicare ACOs

The CMS achieved savings from the Medicare Shared Savings Program last year, marking the second year in a row the agency turned a profit from the program.

About 66% of the 548 Medicare accountable organizations produced a total of $1.7 billion in savings in 2018 and the CMS scored a $739.4 million gain, according to new agency data. That's significantly higher compared to 2017 when the CMS saved $314 million from the program.

The savings were greater as more ACOs took on downside risk compared to previous years, analysts said.

Overall, 82.6% of ACOs—or 453—were in Track 1, which doesn't involve downside risk. That is fewer ACOs than 2017 when 92% of the ACOs were in Track 1.

Of the 95 ACOs in downside risk tracks, 55% were in Track 1+, which was available for the first time last year.

Track 1+ was likely appealing for ACOs because while it put them on the hook for potential losses they were modest compared to the other tracks.

"It gave them (the ACOs) that sweet spot where they can assume downside risk but in a reasonable manner," said Allison Brennan, senior vice president of government affairs at the National Association of ACOs.

The downside risk ACOs were also more likely to achieve savings. Fifty-nine of the 95 downside risk ACOs got a bonus compared to just 146 of the 453 upside only ACOs.

This shows that the ACOs that decided to take on downside risk were confident they would do well, said David Muhlestein, chief research officer at Leavitt Partners.

ACOs were also motivated to join downside risk tracks because they are considered advanced alternative payment models under MACRA, Brennan said. Clinicians are exempt from MIPS if they are in an advanced alternative payment model and qualify for a 5% payment bonus.

"There's an incentive to be in an advanced alternative payment model," Muhlestein added.

Even though the CMS achieved savings in the MSSP, it's still modest compared to overall Medicare spending. There are about 10.1 million beneficiaries in the program, therefore $739 million in net savings equals about $73 in savings per beneficiary.

"It's still a very small portion of (Medicare's) total expenses," Muhlestein said. "MSSP is going in a good direction, it's getting better ... but it still hasn't shown that this model will be sufficient to address our overall healthcare spending growth concerns as a country."

Although the savings are modest, Brennan said the MSSP is still achieving more compared to other advanced alternative payment models.

"This is a good program, it isn't a perfect one, but this is contributing to hundreds of millions of dollars in savings in a given year and we have to make a dent somewhere," she said.

The savings the program will achieve this year are uncertain considering significant changes to the program went into effect this July. The CMS overhauled the program in December to address concerns that it was costing Medicare money as ACOs remained risk averse. ACOs will now be forced into risk quicker.

The program saw a drop in participants as a result of the changes but Muhlestein said those that stuck in the program are likely confident they can handle the impending downside risk and will still achieve savings for Medicare although they will continue to be modest because the CMS still has to hand out bonuses.

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