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CMS finds $1B savings from Medicare provider group program in 2017


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CMS finds $1B savings from Medicare provider group program in 2017

The Centers for Medicare and Medicaid Services have previously criticized the accountable care organization, or ACO, shared savings program for not providing enough value, but new data shows that the current model generated over $1 billion of savings in 2017.

Data released by the agency Aug. 30 shows that 472 ACOs participating in the program saved $1.09 billion in 2017. Even after the agency shared savings with providers, which is an aspect of the program, CMS saved a net total of $313.7 million.

Allison Brennan, vice president of policy for the National Association of ACOs, said that after six years the program is beginning to show positive results because provider groups have had the time and experience to figure out the intricacies of the model and make adjustments.

"It just takes a while when we look at transformation, both clinical and operational, of this magnitude," Brennan said. "In the early years of the program, the results weren't as impressive as we hoped they would be and that's due to the fact that it's a long learning curve."

ACOs were established by the Affordable Care Act in order to take a more holistic approach to the healthcare process. Instead of billing patients throughout different steps of treatment, an ACO brings together providers such as physicians and hospitals and charges patients according to the total amount of care given. The shared savings program allows ACOs to receive a percentage of savings for keeping Medicare costs low, and requires them to make payments back to the agency for rising healthcare costs. Paying a percentage of costs back is what CMS refers to as assuming risk. ACOs are incentivized to assume more risk by receiving a higher percentage of savings for doing so.

The current program runs on a three-track system, allowing ACOs to choose the level of risk they want to assume. Provider groups are allowed to receive savings, while putting off making payments for rising costs for up to six years.

CMS on Aug. 9 proposed to change the model to require ACOs to assume more risk at a faster rate. CMS administrator Seema Verma has said the current zero-risk model does not work, and provider groups who assume more risk will increase the program's value.

"After six years of experience, the time has come to put real 'accountability' in Accountable Care Organizations," Verma said in an Aug. 9 press release. "Medicare cannot afford to support programs with weak incentives that do not deliver value."

Nevertheless, CMS' data shows that the current structure is saving money even though the majority of ACOs are not assuming any risk. Of the 472 provider groups, about 92% were on the zero-risk track.

One of the biggest changes in the CMS proposal is eliminating the zero-risk track, and leaving in place a two-track system. This would require provider groups to assume more risk incrementally, and shorten the six-year grace period for payments to two years.

Brennan said ACOs are not really assuming zero-risk in the shared savings program, as many providers are making their own investments in things like infrastructure, data analysis and care coordination programs with hopes of achieving the shared savings. Because of these up-front costs, providers are hesitant to take on any more risk.

"It is important to note that even though [ACOs] are in a 'one-sided' ACO model, where they aren't on the hook to pay back losses to CMS, they are already putting in millions of dollars of their own," Brennan said. "So that risk to them is very real."

When the proposed rule was announced, NAACO warned that the proposed changes would lead to provider groups leaving the program. CMS estimated that under the new rule 109 ACOs would leave by 2026. The agency said that 516 ACOs and over 10.5 Medicare beneficiaries currently participate in the shared savings program.