About half of Medicare’s accountable care organizations (ACOs) saved the program money in their first year of operation, but only 25 percent of participants earned a share of those savings, according to an announcement by the Centers for Medicare & Medicaid Services (CMS) on January 30.
In 2012, the first year of Medicare’s ACO program, its two components—the Medicare Shared Savings Program and the Pioneer ACO model—saved more than $380 million, CMS said. Those savings included $128 million from about half of the 114 first-year participants exceeding their first-year targets. Another $126 million went to 29, or 25 percent, of the participating provider groups that met cost-reduction benchmarks under the program.
“While still early in the program, with some ACOs making greater progress than others, the $275 million in savings—and the high quality of care that has accompanied it—are admirable results,” CMS wrote on its blog. (“Medicare’s delivery system reform initiatives achieve significant savings and quality improvements – off to a strong start,” CMS Blog, January 31, 2014)
According to CMS, 54 out of 114 Medicare Shared Savings Program ACOs that started operations in 2012 already had lower expenditures than projected. ACOs are designed to achieve savings over several years, not necessarily on an annual basis.
The 23 provider organizations in the Pioneer ACO program saved between $128 million (as reported by HFMA) and $147 million (as reported by AHLA). Of the 23 Pioneer ACOs, “nine had significantly lower spending growth relative to Medicare fee for service while exceeding quality reporting requirements,” CMS said.
According to CMS, the Physician Group Practice Demonstration initiatives, which offered incentive payments for delivering high-quality, coordinated health care that generates Medicare savings, also performed well in terms of cost savings—approximately $108 million over the course of the five-year demonstration project.
Shared Savings
Jonathan Blum, principle deputy administrator for CMS, said the lack of shared savings by most participating organizations resulted from the build up required to effectively coordinate care across multiple care settings, thus delaying progress. He added that CMS is “in this for the long term.” He noted that organizations that have reported quality metrics “are doing better than the underlying trend.”
(Sources include “Medicare’s delivery system reform initiatives achieve significant savings and quality improvements – off to a strong start,” CMS Blog, January 31, 2014; “Half of ACOs Save Money; a Quarter Share Savings,” HFMA Weekly News, January 30, 2014; “CMS Says Data Show ACOs Have Achieved Cost Savings and Quality Improvements,” Health Lawyers Weekly, January 31, 2014; and “Providers net uneven results from ACO experiment,” Modern Healthcare, January 30, 2014.)
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