Medicare ACO savings miss CBO mark by $2B+: 5 findings

Medicare Shared Savings Program ACOs increased federal spending by $384 million, despite the Congressional Budget Office's prediction they would generate $1.7 billion in net savings from 2013 to 2016, according to recent Avalere research.

Here are five findings from the report, which received funding from the Pharmaceutical Research and Manufacturers of America.

1. In 2010, the CBO estimated MSSP would produce net savings of $1.7 billion, when in actuality ACO performance missed the mark by more than $2 billion as federal spending increased.

2. "This has raised questions about the long-term financial success of Medicare's largest alternative payment model," Avalere notes. While 561 ACOs participate in MSSP this year compared to 27 ACOs in 2012, the majority of ACOs still choose tracks with only upside risk. Upside risk means an organization won't lose money if it's unable to meet certain spending and quality targets.

3. That's noteworthy, as ACOs only taking on upside risk don't have to pay CMS for spending above their threshold. "The Medicare ACO program has not achieved the savings that CBO predicted because most ACOs have chosen the bonus-only model," said Josh Seidman, senior vice president at Avalere.

4. The proof is in the numbers. Avalere found ACOs taking on downside risk saw more financial gains overall. Downside-risk ACOs cut federal spending by $60 million over the five-year period, while upside-only ACOs increased federal spending by $444 million.

5. Avalere did find evidence suggesting on an individual level, ACO performance may be on the upswing for MSSP veterans. ACOs in their fourth performance year generated federal net savings of $152 million, following three years of increased spending.

"These results suggest that CBO's initial projections may not have taken into account the time it takes for ACOs to gain experience with the program and to start to produce consistent savings," the report suggests.

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