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Medicare Shared Savings Program Accountable Care Organizations Achieve $1.9 Billion in Savings for Medicare and High-quality Care


Accountable care organizations (ACOs) participating in the Medicare Shared Savings Program (MSSP) continue to demonstrate success with $1.9 billion in net savings to Medicare in 2020 while rapidly changing care to respond to the COVID-19 pandemic. MSSP ACOs also received high marks on delivering high-quality care to patients, earning an average quality score of 96.87 percent, with 34 ACOs earning a perfect score of 100 percent, according to the Centers for Medicare & Medicaid Services (CMS) data. These impressive results reinforce the value of the ACO model and demonstrate that America’s healthcare providers, with the right incentives, can innovate care while improving quality and lowering costs. Recognizing the success of this program, CMS should take steps to expand the MSSP, make improvements to it and leverage it as an innovation platform. Now, more than ever, improvements to the MSSP and greater incentives to participate in ACOs and other alternative payment models (APMs) are needed to expand on this positive progress.

While nationwide results are impressive, Premier’s data-driven collaborative results paint an even more promising picture of what ACOs can achieve.

Premier’s Population Health Management Collaborative (PHMC) MSSP ACOs include 53 health systems, which have formed 63 MSSP ACOs, and include approximately 460 hospitals and thousands of clinicians working together to align, measure and share best practices and improve population health management. In performance year 2020, PHMC ACO members continued to prove that establishing a well-planned value-based care delivery process and model can lead to success:

  • 85.7 percent of Premier’s collaborative members generated savings to Medicare in 2020.
  • All of Premier PHMC MSSP ACOs are health system/hospital owned/operated. In addition to the 85.7 percent of them who generated savings, 66.67 percent also achieved shared savings payments from Medicare. These shared savings will be critical to reinvest in ongoing care redesign, particularly now that health systems are being tapped as first responders in the COVID-19 pandemic. Comparable ACOs (health system/owned operated, called “high revenue” by CMS) achieved savings at only a 75.49 percent rate and shared savings at a 58.89 percent rate.
  • Premier members achieved $317 in savings per beneficiary compared to $305 for all other health system/hospital owned and operated ACOs.
  • Premier members in two-sided risk models also generated higher shared savings (84.62 percent) than the national average for ACOs in two-sided risk models (82.61 percent).

These results build on Premier’s successful track record since 2012.

“Participation in the MSSP has supercharged Memorial’s ability to partner with clinicians and to access actionable data on cost and quality for our attributed population and redesign our care delivery processes to proactively meet the specific needs of our patients,” said Matt Muhart, Executive Vice President and Chief Strategy Officer at Memorial Healthcare System.

Memorial was able to greatly outperform the country, generating $740 shared savings per person year, which places them in the top five of shared savings per person year across all health system/hospital based (high revenue) MSSP ACOs.

“Collaborating with other value-driven organizations through Premier has elevated our results in the MSSP, fueling continual improvements in the coordination, quality and cost of care for patients in our communities. The shared savings we’ve earned from Medicare allow us to double down on these efforts and further drive enhancements to population health.”

ACOs reward patient-centered care coordination, which is not the case in the fragmented fee-for-service payment system.

ACOs and other APMs incent providers to work together with aligned incentives that are focused on getting patients the care they need in a way that is not possible in fee-for-service Medicare. Rather than individual providers being responsible only for the treatments and services they themselves provide, groups of clinicians and other providers in the community are, together, focused on and responsible for the quality, wellness and total cost of care.

In July, a panel of leading healthcare experts explained how providers in APMs have a better sense of where their patients are in their community, how they interact with the healthcare system and what gaps are exacerbating health conditions. This lays the foundation for a social impact strategy, enabling providers to tailor their approach to patient care and work with their communities, thereby making care delivery more equitable.

Moreover, a Premier survey found that participants in APMs heavily relied on their population health capabilities to manage the COVID-19 pandemic and keep people staying at home healthy. Healthcare providers in the highest risk APMs—such as global budgets and capitated arrangements—faced fewer financial hurdles during the pandemic than those in fee-for-service, as their revenue streams remained more consistent. For clinicians, this meant not having to rely as heavily on COVID-19 provider relief funds.

Changes to the Medicare ACOs will remove barriers to even greater cost savings and quality improvements, as well as faster movement to two-sided risk models.

Congress can act now to provide greater incentives to participate in ACOs and other APMs that allow providers to be in the driver’s seat of care transformation by passing the Value in Health Care Act (H.R. 4587).

An independent analysis estimates the Value in Health Care Act would save the Medicare Trust Fund $280 million over 10 years, by taking the following actions:

  • Extending the Medicare Access and CHIP Reauthorization Act (MACRA)’s 5 percent bonuses for Advanced APMs—which is set to expire in 2024—for an additional six years. This will continue incentives for clinicians to adopt two-sided risk APMs.
  • Eliminating policies that distinguish between high- and low-revenue ACOs in the MSSP. Model designs that discourage inclusion of hospitals undermine the objective of ACOs, which is to coordinate care across all providers to improve care, as well as potentially jeopardize access to needed patient care.
  • Restoring the shared savings rate to at least 50 percent for certain MSSP ACOs to ensure the program is a viable option for both physician and hospital participants.
  • Raising the 3 percent cap on risk scores to 5 percent over an agreement period to better reflect the clinical risk of an ACOs population within the benchmarks.
  • Requiring CMS to transparently address model overlap. The current array of models creates a complex model overlap framework and is not clearly defined, making it difficult for APM entities to determine if they will be successful in the model and deterring some providers from participation.
  • Requiring a GAO report on addressing racial disparities within APMs to ensure that APMs’ focus on wellness, care of the whole person and proactively managing care for populations is promoting heath equity.

Premier will continue to advocate for our stance on this with Congress.

Our experts are helping providers hone their strategies for moving forward successfully in the MSSP. Learn more.

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