NAACOS-Funded Study: ACOs Saved the Government $541.7M in 2013-2015

Although CMS has reported in the past that the Medicare Shared Savings Program (MSSP) increased Medicare spending by $344 million from 2013 to 2015, a new report using a different method found that the MSSP accountable care organizations (ACOs) actually reduced federal spending by $542 million after accounting for shared savings payments earned. Furthermore, MSSP ACOs have generated gross savings of $1.84 billion, nearly double the $954 million reported by CMS.

The report was commissioned by the National Association of ACOs (NAACOS). While CMS calculated savings based on a benchmarking methodology that compares actual spending with targets based on each ACO’s historical spending trended forward, the new report used a difference-in-differences regression to compare spending by ACO beneficiaries with a geographically matched comparison group of beneficiaries that was eligible to be assigned to an ACO but was not.

“The analysis should put to rest claims that shared savings only ACOs do not save Medicare money,” Clif Gaus, ScD, president and CEO of the NAACOS, said in a statement. “The findings confirm the wisdom of giving ACOs adequate time to build the care coordination, information technology, and data analytics capabilities needed to manage financial risk successfully.”

CMS is proposing to overhaul MSSP and force ACOs to take on more risk.

While CMS’ benchmarking methodology addresses how ACO spending has changed compared with the previous year’s spending, this report answers the question “How have ACOs changed expenditures compared with providers not participating in the ACO program?”

The comparison group included 90% of Medicare fee-for-service beneficiaries who were eligible to be assigned to an ACO but did not because the majority of their care did not come from an ACO. The report found significant per member per year (PMPY) savings for each performance period during the 3-year timeframe.

During the 2013 performance period, the difference between the 2 groups in the change in PMPY spending from the precontract period was almost —$110 per beneficiary versus the comparison group. The differential change was –$125 per beneficiary in 2014 and –$117 per beneficiary in 2015 versus the comparison group.

There were a few reasons why CMS’ benchmark methodology produced such different results. First, ACOs in areas of high Medicare spending growth could exceed the CMS benchmark, which is updated annually based on the national average dollar growth, while still outperforming other providers in the local market. Second, because CMS caps the risk score for beneficiaries who are continually attributed, the benchmark is not adjusted to reflect the fact that beneficiaries will have an increased burden of illness as they age. Finally, as ACOs reduce their spending, they reduce the national rate of Medicare spending growth, which lowers the benchmark they are measured against.

“Because the CMS administrative payment and savings estimates do not reflect ‘true’ ACO savings, it produces incorrect references for use in policymaking,” according to the report.