Today’s Managing Health Care Costs Number is 0.06%
Kaiser Health News reported yesterday that the Centers for Medicare and Medicaid Services has not saved any money in its Accountable Care Organization project to date. Here’s a link to CMS news release dated 8/25, titled aspirationally “Medicare ACOs Provide Improved Care While Slowing Cost Growth in 2014.”
From Kaiser Health News
Last year, Medicare paid $60 billion to 353 ACOs to take care of nearly 6 million Medicare beneficiaries. Some ACOs made significant strides in reducing use of hospitals and other costly resources. But patients at 45 percent of groups cost Medicare more than the government had projected based on their patients’ historic costs, records show. After paying bonuses to the strong performers, the ACO program resulted in a net loss of nearly $3 million to the Medicare trust fund, government records show.
The CMS news release notes $411 million in savings, on a base of $60 billion in payments, and even that is 0.06% savings. But the news release also notes $422 million in provider “shared savings” payments – so the net impact on CMS is that more was paid out than was saved. That’s because the 44% of ACOs which cost more than was projected lost a total of $707 million, which more than offset the savings that were not shared with the 56% of provider organizations with costs below CMS projections.
CMS’ data release is incomplete and the statistics in the news release are cherry-picked to show results in a rosy light. Quality metrics are shared for the Pioneer ACOs and not the Shared Savings ACOs. On the bright side, CMS has released a summary of savings or losses by ACO at this URL
Provider organizations have been reluctant to take risk on CMS ACOs – even the groups with large savings have generally opted to stay in the “shared savings” program, in which they have lower upside potential. Participation in the Pioneer ACO program, which is “full risk,” has shrivelled to just 18 organizations.
I’m still optimistic that appropriate provider accountability for both quality and cost of care of a population can lead to higher health care value. The CMS ACO project has substantial flaws.
· Providers get incomplete data late
· Beneficiaries are unaware of the program, and often seek care outside of their ACO.
· The overwhelming majority of provider “risk” is upside only.
But ACOs which are being pitched by health plans for the employer-sponsored health insurance look a lot like the CMS ACOs. Most are “attribution” model, where patients don’t have to designate a specific provider entity. Few include any sort of “downside” risk, and many pay substantial infrastructure payments, making total cost savings low unless the provider organization agrees to substantial cuts in fee schedule at the outset.
Provider organizations like Kaiser Permanente and Intermountain Health and Cleveland Clinic have been developing their infrastructure and their culture for decades or even generations. It’s not surprising that we don’t see huge savings from existing provider entities in the initial years as they drive toward greater accountability.
