CMS’s 2015 ACO Performance Data Confirms: Newer ACO Models Are More Attractive

January 7, 2016 Nico Lewine

On August 25, 2016, CMS released 2015 ACO performance data that demonstrates yet again that ACOs on the whole are improving quality and reducing costs. This will bolster the positive momentum in ACO programs and solidify their place in Medicare’s arsenal of value-based care.

Most of the early headlines on these results have focused on the total program savings—$466 million—and on the modest proportion of ACOs that earned shared savings payments—less than one-third.

However, because the MSSP data reflects almost entirely ACOs participating in the original “Track 1,” we think it is important not to generalize these results to what organizations should see under Advanced ACO models such as MSSP Track 3 or Next Generation ACO.

Financial terms vary by Track and impact shared savings

The actual shared savings payments made to ACOs may seem underwhelming, but we believe this is due to the financial terms of the Track 1 model.

  • Under Track 1, ACOs must exceed a certain threshold of savings before they are eligible to receive shared savings payments. By contrast, Track 3 offers ACOs the option to eliminate this threshold. If all the MSSP ACOs had done this in 2015, the portion of ACOs receiving shared savings payments would have increased from 30% to more than 50%.
  • Furthermore, under Track 3, ACOs’ financial upside is 50% greater than under Track 1.  For 2015, 119 MSSP ACOs received a total of $646 million in shared savings. If these ACOs had been in Track 3, they would have received 50% more for a grand total of more than $980 million.

Figure 1

In Track 1 of MSSP, ACOs have no downside risk

In addition to its financial challenges, Track 1 of MSSP does not have as strong of incentives for ACOs to actually drive performance. Because Track 1 is “upside-only,” some ACOs might not have committed significant time, effort and infrastructure toward reducing avoidable spending while improving quality. Evolent’s experience suggests that upside-only models can be a stepping stone for some systems, but are ultimately insufficient to drive lasting behavior change, and that organizations seeking improvement over the long-haul should pursue Advanced ACO models with downside risk. Indeed, this most recent data release reinforces that the ACOs with downside risk (including both Pioneer ACOs and MSSP Track 2 ACOs) performed better than those in Track 1. 

Figure 2

Track 1 of the MSSP program has several fundamental flaws that make it much harder for ACOs to be successful. Thankfully, CMS now offers improved models, including Track 3 and Next Generation ACO, which address many of these key challenges. Organizations that are serious about value-based business should do more than “dip their toe in the water” with Track 1; they should join an Advanced ACO model in which they can be rewarded appropriately for their efforts to improve quality and reduce costs.

About the Author

Nico Lewine

Nico Lewine is Evolent Health's Managing Director of Clinical Research and Development. Nico has served many of Evolent’s partners in developing system-level strategies, with particular focus on Medicare programs such as Next Generation ACO, MSSP, CPC+, and more. Prior to joining Evolent in early 2014, Nico was an Engagement Manager at a boutique healthcare consultancy in Boston. He received his BA in Molecular & Cellular Biology from Harvard University.

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