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Accountable Care Organizations: A First Look at Shared Savings Distributions - 09/23/2015

Accountable Care Organizations: A First Look at Shared Savings Distributions

Release Date: September 23, 2015

Fast Facts:

  • Medicare ACOs that launched in 2012 and 2013 saved $383 million in their first performance period.
  • Study finds that ACOs that offer potential bonuses to physicians may be more likely to generate savings.

Taking the first close look at a federal program designed to provide cost-savings incentives in exchange for more efficient health care, a Johns Hopkins study published recently in the American Journal of Managed Care found that, while using those cost-savings as incentives for physicians showed promise, there appears to be no single formula for success.

Since President Obama signed the Affordable Care Act into law in 2010, more than 530 Medicare accountable care organizations (ACOs) have been established across the United States, a number that grows every year. ACOs aim to promote better, more efficient care through improved care coordination, quality improvement initiatives, information technology and other interventions. When ACOs save money and meet quality standards, they can be eligible for substantial Medicare rebates.

The study focused on ACOs that began operations in 2012 and 2013 in the Medicare Shared Savings Program (MSSP). The authors found that 54 percent of the ACOs reported lower expenditures in their first year, generating $383 million in savings for Medicare. Fifty-two of those ACOs were eligible to receive shared savings from Medicare.

ACOs planning to pay more than half their shared savings to physicians — whether primary or specialty care — were more likely to have generated savings than those that did not (39 percent to 22 percent), the study found. Further, ACOs that planned to pay more than 60 percent of shared savings to primary care providers were more than twice as likely to have generated savings as those that did not (53 percent to 24 percent).

"Accountable care organizations are an important new model of care from the Affordable Care Act and with an increasingly large presence in health care in the United States," said Scott Berkowitz, M.B.A., M.D., Johns Hopkins senior medical director for accountable care and one of the study's authors. "We felt that it was time to take a look at what they planned to do with potential shared savings and whether certain uses were more associated with success.”

While ACOs can consist of a single health care participating entity, more common are partnerships between multiple entities, such as hospitals, specialty care clinicians, primary care providers and group practices. About 13 percent of MSSP accountable care organizations consist of only one entity. The authors found that ACOs with more than 10 participating entities were more likely to have generated savings than ACOs with 10 or fewer.

Looking more broadly at MSSP ACOs that started operations from 2012 to 2014, the study authors found that 176 had detailed shared savings plans available online and 166 provided detailed breakdowns of how they planned to allocate their shared savings. Of those, 137 designated a specific amount — on average, 58 percent — to clinicians (i.e., providers of both primary and specialty care). ACOs generally planned to use the balance of savings to cover infrastructure costs. ACOs whose partnerships included hospitals shared 69 percent of their savings payments with primary care providers, specialists or hospitals.

Forty-six of the 166 detailed plans highlighted potential direct patient benefits from shared savings. Examples of those patient benefits were hiring new case managers and launching patient education programs.

While there is not yet one recipe for success, says John Schulz, a third-year Johns Hopkins University School of Medicine student and lead author of the study, “our study lays the foundation for understanding and then hopefully improving shared savings models, which is of interest to providers and administrators as well as patients.”. 

More important work lies ahead. “With more data recently available,” says co-author Matthew DeCamp, M.D., Ph.D., of the Johns Hopkins Berman Institute of Bioethics and Division of General Internal Medicine, “we will be able to take a closer look at more ACOs and see if their plans change over time, and how to help ensure high-quality, patient-centered care.”