Medicare Could Have Saved 3X More In 2015 If All ACOs Performed As Well As Premier Inc. Members

CHARLOTTE, N.C. (November 17, 2016) — Medicare accountable care organizations (ACOs) that participate in the Premier Inc. (NASDAQ: PINC) Population Health Management Collaborative (PHMC) have consistently outperformed their peers in both reducing costs and improving quality. Results from 2015 show that while roughly 30 percent of Medicare Shared Savings (MSSP) and Pioneer ACOs qualified for shared savings payments, half of the PHMC Medicare ACOs qualified for shared savings over the same period for the second year in a row.

A Premier analysis suggests if every Medicare ACO achieved the cost and quality performance of PHMC Medicare ACOs, approximately $1.36 billion could have been saved in 2015 alone – nearly three times more than the $466 million in total savings realized by all 404 Medicare ACOs.

“PHMC members have demonstrated that smart planning, active physician leadership and professionally-managed implementation drives sustained quality and population health improvement,” said Joe Damore, vice president of population health at Premier. “These results are critical, particularly now that many providers are evaluating advanced alternative payment models under the Medicare Access and CHIP Reauthorization Act (MACRA). Even with benchmarks that are lower than the national average, these health system-sponsored ACOs are making an impact in a wide variety of communities across America and bending the healthcare cost curve.”

Making up six percent of all program participants, PHMC Medicare ACOs have contributed to 22 percent of the $1.29 billion in total Medicare savings since 2012. Additionally, 80 percent of the PHMC Medicare ACO members that started in 2012 achieved shared savings in 2015 compared to 42 percent of 2012 starters nationally.

In 2015, PHMC Medicare ACOs also achieved higher than average quality scores, even though there was a large jump in Medicare ACO quality scores nationally. PHMC Medicare ACOs achieved scores of 93.8 percent versus 91.5 percent nationally – outperforming by 2.3 percentage points, a 6.5 percent improvement compared to 2014. This includes achieving superior performance in more than half of the quality measures when compared to other Medicare ACOs. For example, in 2015, they performed better than average by approximately:

• 9 percent for ACO11 – Percent of primary care physicians who successfully meet Meaningful Use requirements
• 6 percent for ACO14 – Preventive care and screening: influenza immunization
• 5 percent for ACO15 – Pneumonia vaccination status for older adults

“Succeeding within these models is challenging, but these results show that a shared mission, effective collaborative execution model, peer-to-peer benchmarking and performance improvement along the way can help some make the transition faster, with higher-quality outcomes,” said Melissa Gerdes, MD, vice president and chief medical officer of outpatient services and ACO strategy, Methodist Health System in Dallas. As a PHMC MSSP ACO, Methodist has consistently achieved shared savings since 2012, delivering a total savings to Medicare of more than $40 million. “Being an MSSP ACO participant in Premier’s collaborative has positioned Methodist as a leader in value-based payment.”

PHMC Medicare ACO members identified five key areas of success with alternative payment models to achieve savings based on their experience.

• Improved care management
• Optimized post-acute care networks
• Enhanced utilization of population health information technology
• Managed in-network utilization
• Engaged physicians

Created at the start of 2010, the PHMC includes approximately 450 hospitals and thousands of clinicians working together to align, measure and improve population health management. Through the PHMC, leading health systems work together, share insights and learn best practices from each other. Member experiences in developing successful value-based care delivery and payment models have been published in a recent report with the Robert Wood Johnson Foundation, as well as three white papers with The Commonwealth Fund. In addition, Premier is the only organization that holds the 2015/2016 Best in KLAS title for Value-based Care Advisory Services for having the broadest operational and clinical impact on healthcare organizations.

The Premier analysis measured upside and downside results for all PHMC Medicare ACOs in 2015 to create a weighted average performance rate and multiplied it by the total benchmark expenditure for all other Medicare ACO program participants in 2015.