The Centers for Medicare and Medicaid Services (CMS) released results for three alternative payment models—each of which amounts to shared savings in the tens of millions of dollars.
CMS’ Comprehensive ESRD Care (CEC) Model is designed to identify, test, and evaluate new ways to improve care for Medicare beneficiaries with End-Stage Renal Disease (ESRD). There are 37 ESRD Seamless Care Organizations (ESCOs) participating in the Comprehensive ESRD Care Model. For its first performance year—which was from Oct. 2015 through Dec. 2016—13 providers reported $75.1 million in shared savings, of which $51.2 million was earned by participating providers.
The Pioneer ACO program began on Jan. 1, 2012 with 32 participating organizations and ended Dec. 31, 2016, with eight organizations. In the program's fifth year, it had $68.0 million in shared savings, of which $37.1 million was earned by providers. Banner Health led the group with $10.9 million in earned savings, while on a per-beneficiary basis, Michigan Pioneer ACO (Detroit Medical Center) led the group with $854 in per-beneficiary savings.
Announced in March 2015, the Next Generation ACO model is designed for existing or new ACOs that are able to take on significantly higher risk than was previously available. The model also allows for greater shared savings opportunity, and tests the assumption that with more financial upside it will attract providers that are experienced in coordinating managing risk. With 18 of 45 Next Generation ACOs reporting results, CMS reported a total of $48.3 million in shared savings. Six of the 18 had shared losses. West Des Moines-based Iowa Health led the group with $13.4 million in shared savings and $10.5 million in earned savings. On a per-beneficiary basis, Miami-based Baroma Health Partners led all Next Generation ACOs, with $582 saved per beneficiary.
Our Take: It’s astonishing how little fanfare these results received when they were announced just over a week ago. Between the two ACO programs, CMS saw a gross savings of $110 million. After discounting the provider “earned” savings, the programs still saved taxpayers $41 million, or about $250 per beneficiary.
One could argue that in the scheme of things, that’s a fraction of the overall spend on Medicare, and that’s why few news outlets seem to care. We disagree. First, remember that these programs, CEC included, aren’t just about saving money. They are also about maintaining or improving health care quality and the patient experience. Traditional thinking would suggest that when you cut costs, quality suffers. Here, that’s not the case. CMS calculated the quality score at 100 percent for all reporting participants in the CEC and Next Generation programs, and for the Pioneers, all but one exceeded 90 percent.
Second, best practices in ACO programs spill over into the larger health care ecosystem. Think about it: do the quality and cost-saving lessons that Partners HealthCare learns from its ACO experience remain a secret, only to be applied to the fraction of Medicare recipients it was assigned to? Our ongoing research on ACOs and integrated health systems suggests otherwise.
Finally, ACOs are typically seen as vehicles to improve care and bend the cost curve in primary care. However, as we have seen with CEC, it’s possible to enhance quality while tightening budgets for some of our sickest, most challenging patients.
We spend so much time these days talking about what’s wrong with health care that we neglect to mention what’s right. Small victories like CEC and CMS’ ACO initiatives should be applauded.
Click on the following tables to download the summary results.