Encouraged by larger profits from Medicare accountable care last year, insurer Universal American will look to aggressively expand its ACO operations, executives said Friday as the company announced its latest financial results.
Universal American, based in White Plains, N.Y., reported $26.9 million in revenue from two dozen Medicare accountable care organizations across 10 states for 2014. The overall performance of Universal American's ACOs comes ahead of expected 2014 results from the CMS on the Medicare Shared Savings Program, which launched in 2012 and publicly disclosed performance through the end of 2013.
The publicly traded Medicare Advantage company was an early and aggressive participant in the Medicare Shared Savings Program, which was created under the Affordable Care Act to introduce the new payment model under Medicare. HHS has rapidly expanded the program and announced plans this year to shift half of non-managed care Medicare spending into accountable care and bundled payments by 2018. Universal American jointly owns 25 ACOs with primary care physicians across 10 states.
Nine of Universal American's Medicare ACOs substantially reduced spending for Medicare patients and ACOs will therefore keep a percentage of the savings as bonuses. Universal American will pay primary care physicians $6 million of that amount and keep $20.9 million. That's compared with three Universal American ACOs that saved enough to receive bonuses for performance through 2013, of which the company received $13 million in revenue.
The company's total revenue of the first six months this year was $822.6 million. Universal American reported a net loss for the six months of $5.2 million.
ACO operations for the first six months of the year broke even, said Adam Thackery, the company's chief financial officer said.
Richard Barasch, Universal American's president and CEO, called the ACO results encouraging as he reported the company's second-quarter numbers. New rules for Medicare ACOs starting in 2016 addressed concerns that the program would require too much risk and too little reward next year, he said.
Universal American said it will look to expand its ACOs. That would be a reversal after a rocky start prompted the company to exit some ACOs. “It's really a question for us of pruning away the ones that won't work, and we've done that and will continue to do that, but we also really want to start and really be aggressive toward adding to our portfolio on the ACO side,” Barasch said.
