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Medicare Accountable Care Organizations have increased federal spending, contrary to savings projections

While the MSSP overall was a net cost to CMS in 2016, there is evidence that individual ACO performance may improve with experience.

Jeff Lagasse, Associate Editor

The Medicare Shared Savings Program has performed considerably below the financial estimates from the Congressional Budget Office made in 2010, when the MSSP was enacted as part of the Affordable Care Act, according to a new analysis from Avalere.

This has raised questions about the long-term financial success of Medicare's largest alternative payment model. The MSSP has grown from 27 ACO participants in 2012 to 561 in 2018. Most MSSP accountable care organizations continue to select the upside-only Track 1, which does not require participants to repay the Centers for Medicare and Medicaid Services for spending above their target.

[Also: Seven ACOs drop out of Next Generation program but don't say why]

The research shows that the actual ACO net savings have fallen short of initial CBO projections by more than $2 billion. In 2010, the CBO projected that the MSSP would produce $1.7 billion in net savings to the federal government from 2013 to 2016. But the MSSP increased federal spending by $384 million over that same period.

While the MSSP overall was a net cost to CMS in 2016, there is evidence that individual ACO performance may improve as they gain years of experience with the program. Avalere found that MSSP ACOs in their fourth performance year produce net savings to the federal budget, totaling $152 million. 

The results suggest that CBO's initial projections may not have taken into account the time it takes for ACOs to gain experience with the program and to start to produce consistent savings.

The analysis also shows that the downside-risk models in the MSSP -- Tracks 2 and 3 -- have experienced more positive financial results overall, indicating the potential for greater savings to CMS over time as the number of downside-risk ACOs increase. The upside-only model increased federal spending by $444 million compared to the downside-risk ACOs that reduced federal spending by $60 million over 5 years.

Another finding is that MSSP ACOs have produced $1.6 billion in program savings compared to benchmark projections over the life of the program, increasing the savings each year. The authors said that despite the MSSP increasing federal spending, ACOs are still reducing spending compared to projected benchmarks.

Twitter: @JELagasse
Email the writer: jeff.lagasse@himssmedia.com

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