Higher Ratio of ACOs Report Savings During 2014

September 09, 2015 09:50 am Michael Laff

Expectations were high that accountable care organizations (ACOs) established pursuant to passage of the Patient Protection and Affordable Care Act could generate significant savings to Medicare, and the latest report from CMS(www.cms.gov) on their 2014 performance illustrates gradual but continued savings.

[Doctor taking notes from senior male patient at desk]

The 20 ACOs in the Pioneer Model and 333 ACOs in the Medicare Shared Shavings Program generated more than $411 million in total savings in 2014. Pioneer participants saved $120 million in 2014, compared with $96 million in 2013. Among ACOs in the Shared Savings Program, 92 participants held spending $806 million below budget targets and received $341 million in shared savings payments.

A total of 97 ACOs qualified for shared savings payments of $422 million when they met quality standards and a savings target.

ACOs that have been operating longer are showing improved performance over time. The percentage of ACOs that achieved savings increased from 25 percent in 2013 to 37 percent in 2014.

With two full years of ACO performance now recorded, participants in the Medicare Shared Savings Program have saved Medicare $848 million, according to David Klebonis, chief operating officer of the Palm Beach ACO -- one reason the agency is eager to keep the initiative going.

Story highlights
  • Ninety-seven accountable care organizations (ACOs) qualified for total shared savings payments of $422 million when they met quality standards and a savings target, according to a report from CMS.
  • ACOs that have been operating longer are showing improved performance over time.
  • The Palm Beach ACO ranked second nationally in terms of shared savings.

Although some legislators and analysts argue that an insufficient number of ACOs are performing well, Klebonis offered a different perspective.

"This is a whole new business model," he said. "I expect the savings rates will continue to rise. Compared with other start-ups, that is better than many other markets."

Among the 37 ACOs in Florida, the Palm Beach ACO, which has 34,000 patients, ranked fourth in terms of patient satisfaction. Nationally, it ranked second among 337 ACOs in terms of shared savings. It saved $39 million in 2014 and will receive $14.4 million in payments from CMS.

The Memorial Hermann ACO in Texas, which ranked first shared savings, saved $53 million and received the highest payment from CMS at $22.7 million.

During the 2014 reporting period, the Palm Beach ACO had 240 total physicians, 120 of whom were in primary care. The ACO has since doubled its number of primary care physicians to 240 and added 160 other specialists.

Some physicians are skeptical about the future prospects for ACOs and other savings programs because they wonder how long practices will be expected to continue lowering costs, but Klebonis said CMS understands the concern.

"When we talk to Medicare, we point out that if you keep trying to squeeze blood out of a rock, it makes no sense to anybody," Klebonis said. "They are aware of that. We suspect that as they continue to migrate to a pay-for-value system, they will offer additional incentives for quality."

Klebonis said many ACOs are saving money even if it's not enough to qualify for shared savings. He anticipated that after three years, enough time will have passed to determine whether an individual ACO is successful and whether the entire initiative is achieving its goals.

The Palm Beach ACO is not a medical home but it has adopted many medical home principles, such as increasing office hours, focusing on care coordination and using electronic health records to identify the highest-risk patients. For instance, when Theresa Goebel, D.O., chief medical director for the Palm Beach ACO and a family physician, visits practices in the network, she might notice that a practice is not seeing COPD patients frequently enough and encourage them to meet those patients more often.

"If a patient is sick, tell them you can see them the next day," she said, giving another example. "If you tell them they can come in two weeks that could be too long."

And there are other benefits to being part of an ACO, Goebel said, including a practice being able compare the hemoglobin A1c rates of its patients against other practices, something that would be difficult to do for physicians working independently.

Related AAFP News Coverage
CMS Tweaks to ACO Investment Model Benefit Rural Physicians

After One Year, Physician-run ACO Scores Big Savings Bonus
Of $22 Million Saved Overall, $11 Million Goes to Member Physicians


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