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The Duke-Margolis Center for Health Policy and Leavitt Partners Releases “Medicare ACO Results for 2018: More Downside Risk Adoption, More Savings, and All ACO Types Now Averaging Savings” Report
Salt Lake City, November 11, 2019—Medicare’s flagship Accountable Care Organization (ACO) program, the Medicare Shared Savings Program (MSSP), achieved net savings of $73 per person in 2018, more than double the net savings of $35 per person achieved in 2017. Researchers from the Duke-Margolis Center for Health Policy and Leavitt Partners shared their analysis of Medicare’s annual ACOs performance results in a blog published by Health Affairs and in a recently released issue brief.
“Over the last several years and from a variety of different angles, we have tracked the progress of ACOs, which have generally shown good quality of care and outcomes, and modest but increasing cost savings over time,” said Jonathan Gonzalez-Smith, MPaF, lead author and a Duke-Margolis research associate. “Because of the conservative nature of financial benchmarking, actual savings in 2018 were likely significantly larger and appear to be growing over time.”
These increased savings occurred with significantly greater adoption of “downside” financial risk, which doubled from eight percent last year in 2017 to 17 percent in 2018. Further, now all types of ACOs are achieving net savings on average—including physician-led, hospital-led, and integrated ACOs, as well as small, medium, and large ACOs.
Additional key findings include:
- Physician-led ACOs, which have led the MSSP in net savings per capita for years, continued their success by increasing last year’s per capita savings by 65 percent (to $114). Over 15 percent of these ACOs are in downside risk arrangements.
- Hospital-led ACOs averaged net savings per capita for the first time ever ($43), and 16 percent were in downside risk models.
- Small, medium, and large sized ACOs all had similar per capita savings. However, there remains concern that small ACOs are more hesitant to accept downside risk, likely due to fewer covered lives and smaller cash reserves.
- ACOs that accepted downside risk were more likely to achieve shared savings than those in upside-only risk arrangements, suggesting that greater financial accountability for cost is associated with a stronger commitment to, or more confidence in, making the care transformation necessary for success.
“Generally, this year’s results are consistent with those we have seen in previous years,” said David Muhlestein, PhD, JD, chief research officer at Leavitt Partners. “Larger ACOs do not necessarily perform better overall; physician-led ACOs achieve higher rates of shared savings and total net savings compared to hospital-based ACOs but have trouble staying in the program longer; and, setting a lower financial benchmark makes it more difficult to achieve shared savings, no matter the size of the ACO.”
The research report can be viewed here.
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 please visit www.LeavittPartners.com.
About Duke-Margolis Center for Health Policy
The Robert J. Margolis, MD, Center for Health Policy at Duke University brings together expertise from the policy community in Washington, DC, Duke University, and Duke Health to address the most pressing issues in health policy. The mission of Duke-Margolis is to improve health and the value of health care through practical innovative, and evidence-based policy solutions. The Center’s DC offices are located at 1201 Pennsylvania Avenue, NW, Washington, DC 20004. For more information, please visit our web site: healthpolicy.duke.edu.