Why Do Accountable Care Organizations Leave the Medicare Shared Savings Program?

Bonuses and penalties for cost-reduction seem to be a key factor

In new research published Monday in Health Affairs, authors from the Duke-Margolis Center for Health Policy and Leavitt Partners studied factors that determine whether accountable care organizations (ACOs) thrive or exit Medicare flagship’s alternative to fee-for-service, the Medicare Shared Savings Program (MSSP).

The study looked at 624 ACOs that have been part of MSSP during its first five years. ACOs are a key part of the national strategy to reform health care delivery by making providers more accountable for the cost and quality of patient care. About 30 percent of ACOs in the MSSP exited the program in the past five years.

The MSSP has demonstrated some reductions in Medicare spending and improved quality compared to fee-for-service. With the goal of increasing the impact of the MSSP, the Centers for Medicare & Medicaid Services (CMS) finalized a redesign of the program last December, which is set to take effect in July.

“On average, ACOs appear to be hitting their stride in their fourth year in MSSP -- after completing their first contract -- and are less likely to leave once they have made it to this milestone,” said lead author William Bleser, Ph.D., research associate at Duke-Margolis. “ACOs have needed time to develop the capabilities to succeed in accountable care. CMS’s redesign will accelerate ACOs accepting more financial risk sooner -- for most organizations, within two years, compared to six years previously. Other changes, to make the program more predictable and to accelerate learning, may be important to keep ACOs that can succeed in the program.”

In the first study of its kind to examine what influences ACO survival, the authors found these factors reduced the risk of ACOs leaving MSSP:

-- Shared-savings bonus payments: CMS calculates for each ACO a threshold or benchmark of what that ACO should be spending on average for a patient’s care, based on the health of their patient population. If the ACO spends far enough below its threshold, CMS returns half of the saved amount, called a “shared savings bonus,” to the ACO. “The most important programmatic factor for ACO continuation appears to be an ACO’s ability to realize bonus payments,” the authors state. “Even achieving a bonus just once cut the risk of program exit by more than three-quarters.” Conversely, being in a “downsize risk” track of the program -- that is, at risk of being penalized by CMS for spending too much -- was associated with a higher probability of leaving the MSSP. 

-- Higher benchmark per capita: If the average patient care cost threshold CMS sets for an ACOs is higher, the ACO is more likely to stay in MSSP. “Each $1,000 decrease in per capita benchmark was associated with a 25 percent increased risk of program exit,” the authors note. This finding suggests that MSSP, as it has been structured, may have discouraged efficient organizations from remaining in the program. The new program to begin in July addresses this issue by comparing ACOs not just to themselves over time, but to other ACOs’ benchmarks in their region, so efficient organizations would be more likely to continue in the program.

-- Increased care coordination services: ACOs with more robust services to coordinate care for Medicare beneficiaries also were more likely to stay in the program. These services include simple things like reminder calls for appointments and following up with patients after hospitalizations, to more high-touch services like home visits and coordinating transportation for patients. The authors note that increased investment in care coordination services, a key component of the ACO model, may be an indication of an organization’s commitment to accountable care and to succeed in the program.

One factor that increased risk of exiting MSSP was having a sicker patient population.

Based on the research findings, the authors suggest that CMS will be able to keep successful ACOs in MSSP by supporting them to develop competencies to achieve shared savings bonus payments, strengthening the tie between payment and quality improvement, increasing support for ACOs that care for sicker patients, and adjusting ACO spending benchmarks with regional costs. The new MSSP program aims to include changes along these lines, such as improved timely data sharing; benchmarks that are based on regional spending and are more prospective and more predictable; and support for learning opportunities among ACOs. 

“With half a decade of experience in the shared savings program we have a better understanding what causes ACOs to leave or stay  in the program,’ said David Muhlestein, Ph.D., JD, chief research officer at Leavitt Partners. “We can take these findings to improve the program.”

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About Duke-Margolis Center for Health Policy

The Robert J. Margolis, MD, Center for Health Policy at Duke University is both an academic research center and a policy laboratory that addresses the most pressing issues in health policy. Its mission is to improve health and the value of health care through practical, innovative, and evidence-based policy solutions. To learn more, visit healthpolicy.duke.edu.

About Leavitt Partners

Leavitt Partners is a health care intelligence business. The firm helps clients successfully navigate the evolving role of value in health care by informing, advising, and convening industry leaders on value market analytics, alternative payment models, federal strategies, insurance market insights, and alliances. Through its family of businesses, the firm provides investment support, data and analytics, member-based alliances, and direct services to clients to support decision-making strategies in the value economy. For more information visit www.LeavittPartners.com.
 

CONTACT: Patricia Green, Duke-Margolis
patricia.s.green@duke.edu
or
CONTACT: Julie Sommer, Leavitt Partners
julie.sommer@leavittpartners.com