The Medicare Shared Savings Program (MSSP), or Accountable Care Organizations (ACOs), continue to be CMS’ flagship pay for performance (P4P) model delivering care via 432 MSSP ACOs located in every state to over nine million, or 16%, of Medicare beneficiaries. This year the agency did not announce 2016 performance year results. Instead, CMS posted without notice in late October a Public Use File (PUF) or spread sheet summarizing 2016 performance. What analysis CMS did provide was by CMS’ vendor, the Research Triangle Institute (RTI), several weeks ago to ACO participants via webinar. RTI’s slides are not made publicly available.
Like performance year one (2013), two (2014), and three (2015), performance year four (2016) once again produced limited positive results. As stated last year, CMS does not evaluate the ACO program, therefore, ACO participants and Medicare policy analysts are left to decipher how success was achieved, what performance results mean for the MSSP program and in context of the agency’s overall efforts to reduce Medicare spending growth.
2016 ACO Financial Performance Results
Here is a bulleted summary of 2016 financial performance based on the PUF and RTI’s slides.
In 2016 there were 432 ACOs that had their performance year results reconciled.
Of these, 410 were Track 1, six were Track 2 and 16 were Track 3.
Of the 432, 134 earned shared savings or 119 out of 410 Track 1s, six out of six Track 2s earned shared savings and nine out of 16 Track 3s earned shared savings. Four Track 3 ACOs owed $9.33 million in shared losses. Only 129 actually received shared savings checks because five of the 134 owed CMS for advanced ACO payments.
Physician only ACOs once again were more successful than ACOs that included a hospital, or 41% versus 23% respectively.
Also again longer tenured ACOs were more successful. Among the 2012-2013 ACO class 42% were successful compared to 18% of the 2016 starters.
The 134 2016 ACOs earned in sum slightly more than $700 million in shared savings. Actual savings paid out was close to $650 million because imperfect quality caused ACOs to leave money on the table and because of Medicare reimbursement or sequestration cuts required the 2011 Budget Control Act.
For 2016 30% of participation MSSP ACOs will receive a shared savings check compared to 29% in 2016, 26% in 2015 and 27% in 2014.
Earned shared savings were again highly concentrated. The 15 highest performing ACOs received $265 million total in shared savings as compared to the 15 lowest performing shared savings ACOs that received $20 million in total. An August DHHS Office of Inspector General (OIG) report made note of this dynamic, i.e., about half of the spending reductions during the first three years of the program, or $1.7 billion, were generated by 36 ACOs and three ACOs in that group generated a quarter of the amount.
Of the remaining 294 2016 ACOs, 107 fell within their positive Minimum Loss Ratio (MLR) corridor, 105 fell within their negative MLR corridor and 82 fell outside their negative MLR corridor. This last group, the worst performing ACOs, was 19% of all 2016 ACOs, significantly less than the 24% of the worse performing 2015 ACOs.
Again, success was largely determined by an ACO’s financial benchmark. ACOs that earned shared savings in 2016 had a reconciled benchmark 10% higher than all other ACOs, or respectively $11,614 per beneficiary versus $10,563 per beneficiary, or a benchmark 7% higher than those within their positive MLR corridor and 12% higher than those that fell below their negative MLR. The OIG report reached the same conclusion. During the first three years of the program, ACOs that received shared savings had a $11,748 per beneficiary benchmark compared to a $10,284 per beneficiary for ACOs that did not receive shared savings, a 12% difference. As noted last year, because of this successful ACOs only had to comparatively spend a trivial amount less than their financial benchmark to be successful.
In my first post in this three-part series, I documented three problems with Pioneer ACOs: High churn rates among patients and doctors; assignment to ACOs of healthy patients; and assignment of so few ACO patients to each ACO doctor that ACO “attributees” constitute just 5 percent of each doctor’s panel. I noted that these problems could explain why Medicare ACOs have been so ineffective.
These problems are the direct result of CMS’s strange method of assigning patients to ACOs. Patients do not decide to enroll in ACOs. CMS assigns patients to ACOs based on a two-step process: (1) CMS first determines whether a doctor has a contract with an ACO; (2) CMS then determines which patients “belong” to that doctor, and assigns all patients “belonging” to that doctor to that doctor’s ACO. This method is invisible to patients; they don’t know they have been assigned to an ACO unless an ACO doctor tells them, which happens rarely, and when it does patients have no idea what the doctor is talking about. 
This raises an obvious question: If CMS’s method of assigning patients to ACOs is a significant reason why ACOs are not succeeding, why do it? There is no easy way to explain CMS’s answer to this question because it isn’t rational. The best way to explain why CMS adopted the two-step attribution method is to explain the method’s history.Continue reading…
ACOs suffer astonishingly high turnover rates among their doctors and patients; their patients are unusually healthy; and those unusually healthy ACO patients constitute about 5 percent of each ACO doctor’s panel of patients. These facts appear in three recent reports: CMS’s final evaluation of the Pioneer ACO program, and two papers published in Health Affairs by John Hsu et al.
Each of these facts – high turnover, healthier patients, and few ACO patients in each physician’s panel – poses problems that cannot be solved without a substantial redefinition of the ACO. How are doctors supposed to influence the health and cost of patients they see only sporadically or not at all? How are ACO doctors supposed to lower costs if their sickest and most costly patients are not in the ACO? How are ACOs supposed to alter physician behavior when their physicians see fewer than 100 ACO patients out of a typical panel of 1,500 to 2,000 patients?
Since Accountable Care Organizations (ACOs) are CMS’s largest pay for performance model delivering care to over 7.5 million beneficiaries, each August Medicare policy analysts await CMS’s press release summarizing ACO financial and quality performance for the previous year.This past August 25, CMS announced 2015 results.Like performance year one (2013) and two (2014), performance year three again produced marginal results.Largely because, inexplicably, CMS is not evaluating the ACO program, once again analysts are left to decipher what performance results mean for the program, how success was achieved and what ACO performance means in context of the agency’s overall efforts at lowering Medicare spending growth.
Summary of 2015 Performance Results
In CMS’s August 25th press releases, the agency noted 120 out of 392 2015 ACOs earned share savings. 1CMS also releases annually a data file summarizing ACO participants, participation track, number of assigned beneficiaries, financial benchmark and quality measurement data.Based on the data file, of 392 ACOs, 115 ACOs earned shared savings, 114 in Track 1 and one in Track 2, or 29% of all ACOs. 2This compares to 26% in 2014. 3Of the remaining 276 ACOs, one ACO earned shared savings but did not meet their quality performance standard, 86 ACOs produced savings but did not exceed their Minimum Loss Ratio (MLR) and 95 received reimbursements beyond their benchmark and fell within their negative MLR. The worst performing ACOs were the 95, or 24%, that received reimbursements that exceeded their negative MLR.Had this last group not been in Track 1 they would have owed CMS half of their above benchmark reimbursements.As in 2014 earned shared savings was highly concentrated.Ten of the 115 successful ACOs earned $220 million in shared savings, or more than one-third of total $645 million in shared savings payments.
In her August 14th 2016 interview with the LA Times regarding the ACA and value-based reimbursement, HHS Secretary Sylvia Burwell stated, …”and medical providers want this.1” After reading this article, I wondered for a moment if I am working in the same healthcare system as the Secretary. Having spent a significant part of my 36-year career negotiating financial transactions with and/or on behalf of practicing physicians, I can unequivocally state that, unlike healthcare thought -leaders and policy wonks, a scant few practicing physicians are on board with population health management, value-based care and the “triple aim.”
It is essential to significantly improve the value of healthcare and it will require a lot of work by all. Given the disconnect between the policy makers/‘thought- leaders’ and the nation’s practicing physicians, I am pretty sure we are not going to get very far. Most practicing physicians consider the current movement to value based care/population health to be ineffective, expensive, bureaucratic interference with the practice of medicine.
I just finished reading the 962-page MACRA rule CMS released late in April. I was prepared for the mind-numbing complexity of the document. What I was not prepared for was CMS’s glib treatment of two fundamental issues: The woeful inaccuracy of the scores CMS will use to punish and reward doctors, and the cost to doctors of participating in ACOs, “medical homes” and other “alternative payment models” (APMs)
These are not peripheral issues. If CMS dishes out financial rewards and punishments based on inaccurate data, MACRA will, at best, have no impact on cost and quality and may well have a negative effect. The second problem – the high cost of setting up and running APMs – may not be as lethal as the inaccurate-data problem, but at minimum it will reduce physician participation in APMs and, therefore, the already slim probability that APMs will reduce Medicare costs and improve quality.
In this comment and two more to come, I will review both of these problems and CMS’s what-me-worry attitude toward them. I begin with a jaw-dropping example of CMS’s reckless indifference to its inability to measure physician “merit” accurately.
What does the Medicare Access and CHIP Reauthorization Act (MACRA), signed into law in 2015, mean for healthcare organizations and providers? At HIMSS 2016, the CMS Center for Clinical Standards and Quality Director, Kate Goodrich, MD, stated MACRA’s goal: “to have a single, unified program with flexibility. The new Merit-Based Incentive Payment System (MIPS) will offer that flexibility and not be a one-size fits all program. The new rule will reimburse physicians based on four factors.”
Health systems are still waiting for additional details about the “four factors” Goodrich mentioned (listed in this article under “MIPS”) or how CMS will reward providers for delivering better care. We’re aware of MACRA’s general structure, but still waiting for clearly defined rules and regulations. Until then, it will be difficult to evaluate this new law.
Even though health systems are currently in a waiting period for clarifying details about the proposed MACRA regulations (with major impacts in 2019), MACRA’s base year will likely be 2017—and 2017 is just around the corner. This article provides an overview of MACRA and guidance about what health systems should do to prepare for MACRA now.
In my three-part series on why we know so little about ACOs, I presented three arguments:
We have no useful information on what ACOs do for patients;
that’s because the definition of “ACO” is not a definition but an expression of hope; and
the ACO’s useless definition is due to dysfunctional habits of thought within the managed care movement that have spread throughout the health policy community.
Judging from the comments from THCB readers, there is no disagreement about points 1 and 3. With one exception (David Introcaso), no one took issue with point 2 either. Introcaso agreed with point 1 (we have no useful information on ACOs), but he argued that the ACO has been well defined by CMS regulations, and CMS, not the amorphous definition of “ACO,” is the reason researchers have failed to produce useful information on ACOs.
Another reply by Michael Millenson did not challenge any of the three points I made. Millenson’s point was that people outside the managed care movement use manipulative labels so what’s the problem?
I’ll reply first to Introcaso’s post, and then Millenson’s. I’ll close with a plea for more focus on specific solutions to specific problems and less tolerance for the unnecessarily abstract diagnoses and prescriptions (such as ACOs) celebrated today by far too many health policy analysts.
Summary of Introcaso’s comment and my response
I want to state at the outset I agree wholeheartedly with Introcaso’s statement that something is very wrong at CMS. I don’t agree with his rationale, but his characterization of CMS as an obfuscator is correct.
“How would you feel if I tracked every e-mail you sent and tracked how many people responded to them? You wouldn’t like that very much would you?”
“The people who make EMRs. Why aren’t they graded?”
If there’s one negative I hear time and time again from doctors when the subject of quality measurement comes up, it’s this one near-universal complaint. The world is unfair, the cards are stacked against us.
As a specialist at a busy urban medical center I hear the complaints almost every day from colleagues and peers at other hospitals. We’re being singled out for unfair treatment: They’re out to get us. It’s the world against the doctors.
Many of the so-called experts I’ve talked to at meetings around the country express disdain when the topic of physician resistance to quality improvement programs comes up.
But it shouldn’t be terribly surprising that the idea that one’s performance is being tracked can be seen as intrusive and threatening. The reaction is in many ways completely predictable. Continue reading…
Visit SDIndyACO.com, and you’re greeted by a Hawaiian shirt hanging in an otherwise empty closet. “Future home of something quite cool,” the page’s headline reads.
Forget unicorns,camels and all the other metaphors used to describe accountable care organizations these past few years.
The website — the homepage of the newly formed San Diego Independent ACO, which was one of 106 organizations named last week to Medicare’s Shared Savings Program — could sum up where we stand now on ACOs.
While we’re close enough to see their outline, some ACOs are still just teasing their promise. Many organizations have yet to launch a Web presence (or in San Diego Independent ACO’s case, are waiting to get CMS approval). And more health care providers are rushing to build the ACO structure in hopes of winning federal contracts — and filling out the details later.
Understanding the Medicare ACO Model
The ACO model is loosely defined as having integrated teams of providers share responsibility for caring for a select population of patients. (That isn’t a new idea — and based on that definition, California’s had dozens of physician-led groups and integrated networks essentially operating as ACOs for years.)