STUDY SHOWS THAT ACCOUNTABLE CARE ORGANIZATIONS HAVE SAVED THE MEDICARE PROGRAM $2.66 BILLION

            On December 7, 2018, the National Association of Accountable Care Organizations released an updated study showing that Accountable Care Organizations (ACOs) in the Medicare Shared Savings Program (MSSP) saved the Medicare Program $2.66 billion in comparison to Medicare fee-for-service payments for beneficiaries not enrolled in ASOs for performance years 2013-2016. The study was conducted by Dobson DaVanzo & Associates, LLC. Dobson DaVanzo’s initial study, released in September, 2018, had found that ACOs in the MSSP generated savings of $1.84 billion for performance years 2013-2015. Both the initial and updated version of the study show that the MSSP is meeting its goal of lowering the rate of growth of healthcare spending while improving patient access to quality care. 

            ACOs are groups of physicians, hospitals, and other health care providers who have joined together to coordinate care in an effort to improve the quality of care and to reduce costs. Under the MSSP, ACOs which meet certain quality targets and which save the Medicare Program money share in the savings. In total, 561 ACOs participate in the MSSP, covering 10.5 million Medicare beneficiaries. 

            The Dobson DaVanzo study used a regression analysis to compare what the Medicare Program paid in fee-for-service payments for beneficiaries receiving care from ACOs with what the Medicare Program paid for beneficiaries who were eligible for assignment to an ACO, but who did not receive the majority of their care from an ACO. The study controlled for demographic and other beneficiary characteristics as well as for spending changes across individual markets. The study them removed MSSP incentive payments to ACOs and fees from the gross savings levels to calculate net CMS expenditures. For the 2013 to 2016 performance years, the net savings were $665.8 million. 

            The Medicare Program savings found by the Dobson DaVanzo study differ from the Centers for Medicare and Medicaid Services’ (CMS) conclusion that the MSSP did not generate savings.   Therefore, the study also analyzed the differences in the methodologies used. The Dobson DaVanzo study used a regression analysis, a type of economic study frequently used to evaluate program effectiveness by comparing the results of a program to what would have occurred “but for” the program. In contrast, CMS used a benchmarking methodology that compared actual spending to targets. In other words, CMS analyzed the question of how ACO spending changed compared to prior years as opposed to Dobson DaVanzo’s study, which examined what savings were generated compared to likely expenditures absent the MSSP ACO program. Some independent researchers have found that the CMS method understates the savings generated by ACOs. Dobson DaVanzo’s analysis agreed, finding that “[t]he CMS administrative payment and savings estimates do not accurately reflect ACO savings and produce incorrect inferences for policymaking.”  

            The Dobson DaVanzo & Associates, LLC initial and updated studies as published by the National Association of Accountable Care Organizations are linked above.