Farzad Mostashari, MD, former national coordinator for health information technology, explains a few ways to interpret the first-year results of accountable care organizations in the Medicare Shared Savings Program.
Dr. Mostashari, now a visiting fellow with the Brookings Institution's Engelberg Center for Health Care Reform, co-authored a blog post with Ross White, project manager with the center, for the institution. Below are the three "preliminary interpretations" they made from the first-year results of ACOs in the Medicare Shared Savings Program.
1. The cards aren't stacked against physician-owned practices. Of the 29 ACOs that earned bonuses in year one (out of 114), 21 were physician-led. And while the difference is not statistically different, according to the blog post, 29 percent of the physician-led ACOs achieved savings greater than their minimum savings rate compared with 30 percent of the remaining ACOs, most of which are hospital-sponsored.
The reason for this broad success of physician-led ACOs is unclear, according to Dr. Mostashari and Mr. White. "However, it's possible that physician-led ACOs tend to [be] more nimble in execution, or perhaps the 'one foot in two canoes problem' is less acute for primary care providers than hospitals," they wrote. For instance, improvements in care coordination and chronic disease management result in more primary care services, whereas hospitals would need to deal with the "demand destruction" on their fee-for-service business lines if they reduced admissions.
2. The jury is out on the Advanced Payment Model. The Center for Medicare and Medicaid Innovation gave 35 small and rural ACOs upfront monthly payments as part of the Advanced Payment Model. Through the model, selected participants receive upfront and monthly payments, which they can use to make investments in care coordination infrastructure. Of those 35 advanced payment model ACOs, first-year results are available for 20.
Thirty percent of the Advanced Payment ACOs (six of the 20) achieved shared savings, comparable to 28 percent (15 out of 53) of other physician-led ACOs. "The problem is, with such small numbers the true difference between the two groups may actually be significant, but there are not enough Advanced Payment ACOs to compare the two groups," wrote Dr. Mostashari and Mr. White. "CMMI has not indicated whether any participants will be added to the Advanced Payment pilot, but we believe it should be considered in order to generate more evidence on how to best assist smaller ACOs."
3. It is easy for ACOs to cut costs if they started out high. Dr. Mostashari and Mr. White point to some evidence that ACOs in states with the highest Medicare costs are more likely to achieve shared savings. For instance, Florida, Louisiana, Mississippi and Texas are states that include or are in the most expensive (risk adjusted and standardized) regions for Medicare. ACOs in these states account for 25 of the 114 ACOs (22 percent) but include 10 of the 29 ACOs (34 percent) that achieved shared savings, according to the post.
"While reducing costs in high-cost areas is an important policy objective, achieving physician participation in alternative payment models nationwide may require CMS to consider modifications to the baseline calculation formulas in the next round of ACO rulemaking (expected this fall)," the authors wrote.
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