ACOs Saved Medicare $3.53 Billion, New Analysis Finds

Accountable care organizations (ACOs) have reduced spending by $3.53 billion from 2013 to 2017, and after accounting for shared savings bonuses, saved the federal government $755 million.

That’s according to a new evaluation by the Washington, D.C.-based consulting firm Dobson DaVanzo & Associates, conducted on behalf of the National Association of ACOs (NAACOS), which represents organizations participating in the ACO model.

The report is the latest iteration in a series of analyses that have sometimes produced wildly varying results in terms of the savings generated by ACOs, which have the goal of reducing spending by bringing providers across the continuum together to coordinate care. When the cost of caring for patients within the ACO falls within spending targets, the ACO’s providers can receive shared-savings bonuses; when spending exceeds it, the operators are on the hook for the extra costs under certain tracks.

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The new report from Dobson DaVanzo is an update of work that the firm has previously done for NAACOS, initially summarized in a report that was released in December of last year. In the newest iteration of the report, which was submitted November 20, the consulting firm added 2017 performance year data, including ACO beneficiary assignment, provider participation, and expenditure data for assigned and unassigned beneficiaries to estimate the savings.

The evaluation by Dobson DaVanzon compares the spending of ACOs to that of similar, non-ACO prviders and patients to show what spending would be without the organizations. It’s an approach similar to that used by the Medicare Payment Advisory Commission (MedPAC) to assess ACO savings; MedPAC found earlier this year that ACOs generated slight savings in the form of a 1 to 2 percentage-point drop in Medicare outlays between 2013 and 2016.

But the commission also noted that the definition of treatment and comparison groups can affect the validity and magnitude of estimates of program savings.

The Centers for Medicare & Medicaid Services (CMS), on the other hand, uses its own preset spending targets when generating savings calculations, which is an “overly simplified, wrong way to judge ACOs,” NAACOS health policy and communications advisor David Pittman argued to Skilled Nursing News earlier this year.

“It doesn’t compare what Medicare spending would be like in the absence of ACOs,” he said. “This method shows large savings driving by ACOs.”

The Dobson DaVanzo report highlighted that disparity. The firm found that overall, compared with spending in unattributed beneficiaries, the ACO Medicare Shared Savings Program (MSSP) generated about 1% to 2% savings over time. CMS’ calculations for savings, however, showed a very different story.

Medicare Shared Savings Program Savings for 2013–2017 after Accounting for Shared Savings Payments Dobson DaVanzo Analysis Compared to CMS Benchmark Approach
Source: Dobson DaVanzo

“In general, we agree with MedPAC that analyses of ACO savings are highly sensitive to the selection of comparison group beneficiaries,” the authors wrote in their report. “We have also found that the method for controlling for geographic variation over time and other ACO beneficiary inclusion and exclusion criteria (such as the choice here to include beneficiaries who die during an attributed performance year) may substantially affect findings.”

ACOs have drawn fire from skilled nursing operators, who note that regardless of the savings generated for CMS, many of those dollars come from reducing SNF length of stay for patients or sending them away from the SNF setting altogether.

“The ACOs have turned out to simply be a vehicle for whoever the convener of the ACO is to reduce post-acute volume in the SNF setting,” one anonymous operator argued earlier this year. “It’s an easy target for ACOs with a weak partner.”

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