On the heels of a recent report arguing that accountable care organizations have been ineffective at bringing down costs for health care, the latest round of numbers from the CMS paints a different picture.
The ACO model works by incentivizing providers throughout the health care service chain to improve quality and reduce costs. In the Medicare system, the health care providers then earn a cut of the savings. According to the CMS, the Affordable Care Act’s Medicaid Shared Savings Program, which serves more than 12.1 million Medicare beneficiaries, saved the program nearly $1.9 billion in 2020, after paying out $2.3 billion in performance bonuses to participating ACOs.
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“Accountable Care Organizations are an Affordable Care Act success story,” said CMS Administrator Chiquita Brooks-LaSure. “The 2020 Shared Savings Program results continue to demonstrate the impact ACOs have in improving quality and lowering health care costs.”
The National Association of ACOs (NAACOS) highlighted some key findings from the data in a recent press release, including:
- $390 in gross savings per beneficiary
- 67% of ACOs earned shared savings
- ACOs earned $2.3 billion in shared savings payments
- 75% of shared savings-only ACOs produced gross savings and 55% earned shared savings
- 97% of at-risk ACOS produced gross savings and 88% earned shared savings
“Today’s data underscores the need for policymakers to do all they can to grow the ACO model and extend the program’s benefits to more patients,” said Clif Gaus, Sc.D., president and CEO of NAACOS.
So how does this data reconcile with the findings from the recent study published in the Journal of General Internal Medicine? In the simplest terms, it’s because our health care system is simply too complex to make any sort of blanket statements as to the success or failure of any cost-saving health care program.
Take, for example, a 2019 report from the United Hospital Fund, which found that ACOs in New York generated a net loss of $70 million. The specific numbers, however, are not so dismal: 11 participating ACOs generated a net savings of $41 million. Though this was negated by 13 programs that posted a net loss of $62 million, it does show promise for ACOs.
In addition, it depends on who the numbers are calculated. Kahn and Sullivan’s study “omitted ACO overhead costs,” which affect provider costs but not CMS net costs. “MedPAC estimates overhead for ACO programs at 2 percent of Medicare spending,” the authors wrote. “If ACOs save CMS and providers at most a few percent, this implies that ACOs are actually raising systemwide costs.”
While Kahn and Sullivan advocate for an end to the “ACO experiment,” others in the industry would caution that these numbers alone aren’t enough to make a decision. A 2020 report to Congress from the Medicare Payment Advisory Commission, notes that, “Although the estimated savings from these models are modest, they surpass those achieved by a wide variety of care coordination models Medicare has tried. Thus, it is important that these opportunities for program savings be preserved in future ACO models.”
Moreover, numerous analyses of the outcomes of ACOs to date have noted the difficulty in overhauling practices and incentives within the current health care system. The authors of the 2019 United Health Fund report noted that “Discussions with ACO leaders and industry experts suggested that some less quantifiable characteristics were at least as important as the structural issues: strong and legitimate leadership; substantial investment to build a strong infrastructure to support population health improvement; and, perhaps most important, a shared sense of common purpose among a heterogeneous mix of providers historically accustomed to going their own way.”
Thus, simply looking at the current reported savings (or losses) of ACOs doesn’t tell the full story. Shifting the health care system away from its engrained fee-for-service model to value-based approaches involves so many moving parts that focusing on just one measure creates a barrier to ongoing progress.
As directors of the Health Care Transformation Task Force wrote in a 2018 blog post for Health Affairs, “No organization gets it perfectly right on the first try. High-performing ACOs understand that overhauling the delivery of care and succeeding under new financial incentives is a long-term endeavor that requires many adjustments along the way. … Provider organizations need clear support from policymakers that the public programs will continue to transition away from fee-for-service toward more advanced risk models.”
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