The Medicare Payment Advisory Commission (MedPac) released its biannual report summarizing policy issues and changes to be considered for the Medicare program, punctuated with a surprisingly strong endorsement of Accountable Care Organizations in Medicare. The June 2018 report reviewed the current performance of accountable care organizations (ACOs), highlighting specific problems that need to be addressed for two-sided ACOs to remain sustainable in the program.

Most notably, MedPac’s conclusion shows that ACOs are generating larger savings than simple comparisons to their benchmarks would suggest, stating that “ACOs may have saved Medicare from 1 percent to 2 percent more than indicated by their performance relative to benchmarks.” MedPAC also noted that “While these savings may appear modest, they are more than most care coordination demonstrations have achieved, including the most recent Comprehensive Primary Care initiative (Dale et al. 2016, Nelson 2012).”

MedPAC also analyzed contributors to ACO savings and found that, contrary to widespread concern among hospital leadership, most savings in ACOs to date have come from post-acute care, not reduced inpatient admissions.

In interviews we conducted in 2012 and 2013, many ACO leaders expected to generate savings by reducing the volume of inpatient care. In particular, physician leaders of ACOs saw the hospital as a key driver of spending, and reducing unnecessary hospital admissions as a key source of savings. However, a review of the literature finds that reducing (post-acute care) has been a much bigger source of ACO savings than reducing inpatient admissions (McWilliams et al. 2017a, McWilliams et al. 2017b).

MedPAC also affirmed that ACOs including hospitals can be productive participants in the program, saying that “the data show that ACOs with hospitals can meet spending targets.”

CMS is expected to issue a new rule affecting the Medicare Shared Savings Program ACOs within the coming weeks. Caravan Health hopes that CMS will address deficiencies in the regional benchmarking methodology that punish rural areas as well as other contributors to instability in the program benchmarks. Stay tuned at CaravanHealth.com for analysis of the proposed rule when it’s posted.

Sign up for Caravan Health's weekly newsletter to keep up to date with the latest ACO news.

Recent Resources

CMS Actions in Response to the COVID-19 Public Health Emergency

The Centers for Medicare and Medicaid Services just issued a lengthy set of policy changes to address the growing COVID-19 public health emergency (PHE). These changes will help hospitals and health providers to respond to the crisis more quickly and safely, including many more options for telehealth in Medicare.

ACO, Policy, Webinars & Events, Quality, Value-Based Care, COVID-19

Stop Standing Still: How to Get Started in a High-Performing Caravan Health ACO

Tuesday, September 24 at 9:00am PT / 12:00pm ET

ACO, Webinars & Events

10 Reasons ACOs Can Fail

Just published in Becker’s Hospital Review – Caravan Health Senior Vice President Tim Gronniger discusses ten reasons Accountable Care Organizations can fail.

ACO, Blogs & News, Value-Based Care

attention

Stay up to date on the latest info on value-based care - visit our resources page

ACO insights delivered right to you

Thank you

Sign up for our newsletter of data-driven news and stories from the latest in ACOs, value-based care, and population health.

  • Real-time insight into alternative payment model trends
  • Strategies and practices that drive results
  • Leadership lessons from health care and beyond
  • Perspectives on the changing health care landscape

By sharing your email you agree to our Privacy Policy

newsletter signup