By Ashley Ridlon and Jon Karl
In 2018, 548 accountable care organizations (ACOs) participating in the Medicare Shared Savings Program (MSSP) generated more than $739 million in net Medicare cost savings while improving quality of care for patients. This new performance data confirms the continuation of several trends we've highlighted, including higher savings among ACOs taking two-sided risk and improved performance over time. It also shows higher savings among physician-led ACOs relative to hospital system-led ACOs.
Given that the vast majority of MSSP participants are in the program's upside-only Track 1, we couldn't help but wonder: What do these results tell us about the untapped savings potential of ACOs? Are providers leaving money on the table, and if so, how much?
To answer these questions, we examined results across the 138 physician-only ACOs in MSSP's Track 1 in 2018. While 74% of these participants generated gross savings (amounting to more than $745 million), only 41% surpassed the minimum savings rate (MSR) required to receive shared savings payments from CMS. Settlements paid out to this physician cohort totaled $282 million.
Track 3 offered substantially more upside potential—up to 75% sharing rate—and several options for minimum savings rate and minimum loss rate (MLR) requirements. These included 0% symmetrical MSR/MLR, which makes the ACO eligible for first-dollar savings but also responsible for any first-dollar losses.
According to our analysis, if all Track 1 physician-only ACOs that generated gross Medicare savings had instead participated in Track 3 and selected the 0% MSR/MLR option, they would have taken home a total of $501 million—78% more in shared savings payments!
Shifting to Track 3 would have come with capital reserve requirements ($156 million for this physician cohort) and substantial total downside risk exposure ($2.3 billion). These capital requirements and large potential downside exposure have deterred some physician-led ACOs that might otherwise be willing to move to higher levels of risk and reward. These same constraints are apparent in CMS's new "Pathways to Success" redesign of MSSP, and ACO leaders must get smart on successfully managing risk and accessing capital, as all Medicare ACOs will be required to assume two-sided risk in the coming years.
To learn how Evolent Health empowers independent physician ACOs to generate near-term rewards for physicians and offload downside risk while improving overall quality of care for Medicare beneficiaries, contact Evolent Care Partners Managing Director Conor McCaw. Evolent Care Partners empowers independent primary care physicians with the clinical expertise and financial resources to enable whole-person health.
- Ashley Ridlon is Vice President of Health Policy for Evolent Health. She leads the development and implementation of the company's health policy and advocacy strategy to drive value-based health care transformation across the country.
- Jon Karl is Director of Growth at Evolent Care Partners. He is responsible for developing partnership models that empower independent physicians with the capabilities and capital needed to succeed in value-based care.