Providers, as well as yours truly, are keeping a close watch on ACOs. While these programs pertain mostly to physicians and hospitals, a trickle-down effect is expected in the long term care field. But perhaps we should hold off from reading the tea leaves quite yet.
For those new to the lingo, ACOs, are CMS-sanctified collaborations among physicians, hospitals, and other providers who voluntarily work to give high-quality service to Medicare fee-for-service beneficiaries. Those who do exceptionally well—lowering their health care costs while meeting quality standards—receive remuneration.
How much moolah ACOs receive requires some math. Don’t click away just yet—the math portion of this blog will be over by the end of this paragraph (or two). ACOs have their choice of a one- or two-sided model. Regardless of the model chosen, if an ACO meets or exceeds the minimum savings rate (MSR, aka “amount of cost-cutting achieved”) AND receives a high-quality score, it gets back the money it saved, up to a performance payment limit. Similarly, ACOs with losses that meet or exceed the minimum loss rate have to pay these losses, also up to a loss-sharing limit.
CMS announced earlier this week that 20 Pioneer and 333 Medicare Shared Savings Program (MSSP) ACOs, both in their second year, generated net savings of more than $411 million in 2014. Additionally, 97 ACOs qualified for shared savings payments of more than $422 million by meeting their quality standards and savings threshold.
Yet these gemstone programs may have lost their glow, and providers may want to borrow a jeweler’s loupe. The good folks at The National Association of ACOs (NAACOS) issued a press release stating that while “pleased that the hard work of the nation’s Accountable Care Organizations (ACOs) continues to improve quality for Medicare patients,” they are “disappointed, but not surprised, that the financial results were not better.”
According to the release, “hundreds of organizations with thousands of doctors, hospitals, and other health care providers have invested over $1.5 billion of their money in the ACO program to date, but they have received only $656 million total in return. CMS has in turn received over $848 million in savings for a small investment.”
NAACOS head honcho Clifton Gaus warned, “This is not a sustainable business model for the long-term future. With Medicare cost growth at record lows, now is the time for the government to invest in and support a national effort for population-based coordinated care and not just take, or be satisfied with, savings from a minority of ACOs at the risk of the majority of ACOs abandoning the program.”
Slightly more than a quarter of the MSSP ACOs—92 out of 333—will receive payments, while the majority (241) will receive no return on their investment, claimed the press release.
“Consequently, they will struggle to stay in the program,” said the release. “We estimate that 40-50 ACOs will leave the program this year.” According to CMS game rules, ACOs must stay in the program for three years. As they are approaching year three, health care analysts are curious how many will stay or go.
As with most things, time will tell. CMS will announce new and renewing ACOs around the end of the year.
Perhaps providers should keep their eyes on the agency’s Bundled Payments for Care Improvement Initiative…
Jackie Oberst is Provider’s managing editor. Email her at firstname.lastname@example.org. Follow the magazine on Twitter @ProviderMag and @ProviderMyers.