From the Journals

Penalties not necessary to save money in some Medicare ACOs



The Centers for Medicare & Medicaid Services may be able to reduce spending through the Medicare Shared Savings Program (MSSP) without asking for health care professionals and organizations to take on penalties or so-called downside risk, according to a study published in Sept. 5 in the New England Journal of Medicine.


Researchers, using fee-for-service claims from 2009 through 2015 and performing difference-in-difference analyses to compare changes in Medicare spending, found that Accountable Care Organizations (ACOs) formed from physician practices were able to save money while hospital-based ACOs were not.

“Our results also suggest that shared-savings contracts that do not impose a downside risk of financial losses for spending above benchmarks – which may appeal to smaller organizations without sufficient reserves to withstand potential losses – may be effective in lowering Medicare spending,” J. Michael McWilliams, MD, PhD, of Harvard Medical School, Boston, and his colleagues wrote.

Researchers found that by 2015, groups participating in MSSP, as compared with those who did not participate, were “associated with a mean differential reduction of $302 in total Medicare spending per beneficiary in the 2012 entry of cohorts of ACOs,” without accounting for bonus payments.

“Accounting for shared-savings bonus payments, we determined that the differential spending reductions in the entry cohorts of physician-group ACOs from 2012 through 2014 constituted a net savings to Medicare of $256.4 million in 2015,” Dr. McWilliams and his colleagues wrote. “For hospital-integrated ACOs, bonus payments more than offset annual spending reductions.”

Dr. McWilliams and his colleagues noted that their findings were limited by a narrow focus on organizational structure (financial independence from hospitals), so other factors could have held to differences in savings; changes in coding practices for ACOs coming in as of 2013; lack of data on costs to ACOs or efforts to lower spending or improve quality; and the inability to assess the effects of the MSSP on many aspects of quality of care because of the nature of using claims-based measures.

“Our results probably underestimate savings to Medicare because they do not account for spillover effects of ACO efforts on nonattributed patients or effects of lower fee-for-service Medicare spending on payments to Medicare Advantage plans,” the researchers added.

The study was funded by a grant from the National Institute on Aging. Dr. McWilliams and Michael Chernew, PhD, also of Harvard Medical School, both have received consulting fees related to ACO research.

SOURCE: McWilliams JM et al. N Engl J Med. 2018 Sep 5. doi: 10.1056/NEJMsa1803388.

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