For the second year, the CMS has awarded bonuses to 1 in 4 accountable care organizations working under a Medicare model intended to spur providers to deliver lower-cost care. They will share $422 million out of the $833 million they collectively saved the government in 2014.
ACO networks get to decide for themselves how to distribute the money, and primary-care doctors appear to be benefiting the most, according to a review of disclosures by ACOs participating in Medicare's Shared Savings Program. Those individual management decisions are a matter of much scrutiny and debate in the industry and among policymakers.
Incentives paid directly to providers can be a powerful way to change the practice of medicine as doctors alter their behavior to earn payouts. But research on incentives has so far yielded mixed findings.
“We don't have a good distribution model for ACO savings,” said Dr. Kavita Patel, managing director of clinical transformation at the Brookings Institution's Center for Health Policy, citing a study published this month.
The Obama administration made the announcement last week that 97 of 353 Medicare ACOs earned bonuses in 2014. Most of them were in the Affordable Care Act's Shared Savings Program, which rewards participants that hold down healthcare costs while meeting quality targets.
Primary-care providers in particular are viewed as linchpins of the ACO model because they are responsible for coordinating care. Yet among the first cohort in the program, those that specifically singled out primary-care doctors for incentive awards were equally as likely to see no bonus as they were to earn payouts.
Some of the participants said they only distributed those rewards to individuals after recovering expenses and upfront investments. A few pledged to hold some bonuses in reserve in case of poor future performance. But most of them are reinvesting a percentage of their bonuses and divvying up the rest among primary-care doctors, specialists and hospitals.
That information is public because Medicare requires the organizations to disclose how they plan to spend their incentive awards, although not all of them published the information clearly and a few didn't publish it at all. The disclosures reveal widely diverse and sometimes highly detailed strategies for sharing bonuses.
Almost one-third of the ACOs participating in the Shared Savings Program that launched in 2012 or 2013 said specifically that they pass along a share of their reward to primary-care doctors, in some cases as much as 80%. Some ACOs said only that they distribute shares to physicians generally. But the ones that disclosed detailed breakdowns of how they allocate those bonuses said 46% on average would go to primary-care doctors. Among ACOs whose disclosures singled out specialists and hospitals for Medicare bonus shares, the average shares were lower—20% and 27%, respectively.
Incentives for individual doctors can be an effective tool for changing physician behavior, said Jim Budzinski, chief financial officer of WellStar Health System, Marietta, Ga.. and president of its ACO. “There is no doubt, as we move from payment for volume to payment for value, incentives will help steer” doctors toward higher quality care, better patient experiences and lower costs, he said.
But the payments are also a mechanism for hospitals and medical groups to get a return on their investments. WellStar's ACO has equally divided its Medicare bonuses—$9.7 million in 2013 and $3.8 million in 2014—between physicians and hospitals.
The Medicare ACOs also differed significantly in the level of detail they provide about how they determine the sums that go to individual doctors. Some disclosed formulas that take into account a physician's performance on quality measures; quality performance affects the bonus amount Medicare awards ACOs in their second year of the Shared Savings Program. Those scores reduced the overall 2014 payouts by $40 million, said Ben Umansky, a practice manager for the Advisory Board Co.
“Each ACO has its own set of decisions to make,” said Universal American CEO Richard Barasch. “There is nothing more powerful for docs than peer encouragement and peer recognition.”