Medicare ACOs increased federal spending by $384 million
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The Medicare Shared Savings Program cost the CMS $384 million from 2013 to 2016 despite projections the program would produce $1.7 billion in savings for the government over the same period, according to a new report.
The analysis, released Thursday by Avalere and funded by the Pharmaceutical Research and Manufacturers of America, shows that risk-averse accountable care organizations are the largest reason why the CMS hasn't yet been able to profit from the program, which began in 2012.
The report found that Track 1 ACOs, or those in an upside-only risk contract, increased federal spending by $444 million from 2012 to 2016 while the downside risk ACOs actually reduced federal spending by $60 million. Medicare ACO performance data is not yet available for 2017.
The vast majority of Medicare ACOs participate in Track 1, an option with no downside risk so ACOs don't have to pay back any losses to the CMS if they miss targets. In 2016, 95% of the Medicare ACOs—or 410—participated in Track 1.
"When you at look the net impact of not having to repay money, it's likely (the CMS) is going to have an increase in spending even though the ACOs have reduced spending," said John Feore, co-author of the analysis and director at Avalere.
The Medicare ACOs have reduced spending by about $1 billion over three years, but the CMS hasn't yet reaped any financial benefits.
Feore said the program will likely be profitable for the CMS soon, as more ACOs are moving into risk. About 18% of ACOs are in a downside risk contract this year, a significant jump from the just 9% of ACOs who took on risk in 2017.
Feore said the introduction of Track 1+ in 2018 was a big motivator for ACOs to take on risk. The new model is viewed as a steppingstone track because it doesn't require as much financial risk as Tracks 2 or 3 of the program.
The CMS will also financially profit as ACOs gain more experience under the program, the report suggests. ACOs in their fourth performance year saved the CMS $152 million, the analysis found.
Most of those ACOs—86%—were in Track 1, but the CMS still financially profited because the ACOs likely didn't incur any significant losses, Feore said. As ACOs gain more years of experience in the program, their ability to save and spend at the targeted benchmark improves, he said.
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