Physician-led accountable care organizations outperform hospital-led counterparts

By | October 16, 2019

New data shows that physician-led accountable care organizations in the Medicare Shared Savings Program outperformed hospital-led ACOs — and not by a little, but by a significant margin.

And according to the Avalere analysis, MSSP ACOs continue to achieve higher savings the longer they participate in the program.

The MSSP is Medicare’s largest alternative payment model, and seeks to transition Medicare away from fee-for-service payment into a new value-based framework. In 2018, 548 MSSP ACOs provided care to more than 10 million Medicare beneficiaries and reduced Medicare spending by $ 739 million.


Under the Pathways to Success changes to the MSSP, CMS now classifies ACOs as “low revenue” or “high revenue.” That’s based on a threshold of Medicare Parts A and B revenue for ACO participants that is associated with the ACO’s assigned beneficiaries. The distinction is made by CMS to classify ACOs as physician-led or hospital-led, respectively.

In 2018, 235 ACOs (43%) were considered low revenue; 313 ACOs (57%) were considered high revenue.

The analysis found that the low-revenue, physician-led ACOs performed significantly better than the high-revenue, hospital-led ACOs. On average, physician-led ACOs produced almost 7 times the amount of Medicare savings per beneficiary than hospital-led ACOs.

The reason? Financial incentives. Though all ACOs strive to reduce spending and boost quality, the impetus to reduce hospital spending is stronger for ACOs that don’t receive a large amount of revenue from hospital admissions.

Low-revenue ACOs saw a net reduction of Medicare spending per beneficiary totaling $ 180.41, whereas high-revenue ACOs saw reductions of only $ 26.76.

The analysis also found that ACOs in their first performance year increased Medicare spending, while all other ACOs reduced spending in 2018. The highest-performing ACOs were those with the most experience. In the first performance year, the net impact on Medicare spending per beneficiary was an increase of $ 20.20. By year six, the impact was a reduction of $ 141.48 per member.

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Under MSSP, 37% of accountable care organizations saved enough money to earn shared savings bonuses, according to data released earlier this month by the Centers for Medicare and Medicaid Services.

On top of that, 66% of ACOs saved Medicare money compared to set spending targets or benchmarks. Both of these numbers are increases from previous years.

ACOs collectively saved Medicare $ 1.7 billion last year alone. The savings were $ 739 million after accounting for shared savings bonuses and collecting shared loss payments.

In December 2018, CMS forced ACOs to take on financial risk sooner to remain in MSSP. At the time the rule was issued, CMS said the expected savings to Medicare would be $ 2.9 billion over 10 years — resulting in fewer ACOs joining the Medicare Shared Savings Program in 2019 compared to last year.

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