Avalere Health
An Inovalon Company

Sep 25, 2014

Avalere Analysis: No Correlation Between Quality and Cost-Effectiveness Among Medicare ACOs


Sep 25, 2014

A new Avalere Center for Payment & Delivery Innovation(TM) analysis finds that Medicare Shared Savings Program (MSSP) participants that earned shared savings payments, performed no better on quality than their MSSP peers.

Of the 49 accountable care organizations (ACOs) that earned shared savings, 29 ACOs (or 59 percent) performed below the MSSP national average, although MSSP ACOs improved on 30 of the 33 quality measures.  There were an additional four ACOs that would have earned shared savings but failed to report the 33 performance measures.

In the MSSP’s first year, ACOs only need to report on all 33 performance measures in order to be eligible to share in savings. In future years, many of the financially successful ACOs may be at risk for leaving savings on the table if their quality scores do not improve.

“These ACO results reveal a potential disconnect between achieving high-quality care as indicated by the ACO quality measures and the ability to achieve savings’, said Erik Johnson, senior vice president, Avalere Health.

ACOs earn points toward their total quality score for meeting or exceeding quality measure benchmarks (e.g., percent of patients receiving the pneumonia vaccine), with maximum points available for those that reach the 90th percentile or better. The Centers for Medicare & Medicaid Services (CMS) does not require ACOs to meet quality measure benchmarks to share in savings during their first performance year. Instead, ACOs only need to report on the complete set of 33 measures (pay-for-reporting). As a result, the 49 ACOs that shared in savings earned the maximum amount. In subsequent performance years, CMS will reduce shared savings payments to ACOs if they do not meet maximum quality benchmarks.  ACOs that fall below minimum quality benchmarks would not be able to share in savings.

Top and Bottom Quality Measures by Performance

Based on the percentage of ACOs that earned maximum quality points (Table 1), the two highest-rated measures come from patient surveys designed to gauge their experience of care. The fourth and fifth-highest are process measures that assess whether providers have engaged in certain behaviors with no evaluation for outcomes associated with those behaviors. CMS proposed to retire and replace the fifth-best measure, Medication Reconciliation, in the calendar year (CY) 2015 Medicare Physician Fee Schedule (MPFS) proposed rule. The remaining measure is an outcome measure, which are often the most difficult to improve upon. To achieve the 90th percentile on All Condition Readmissions, ACOs need a risk-standardized readmission rate of 15.45 percent or better.



The bottom-five measures (Table 2), as defined by the percent of ACOs not earning points, reveals a significant number of ACOs that were unable to achieve at least the 30th percentile for several outcomes measures. All five of these measures are in the Care Coordination/Patient Safety and At-Risk Population domains. Even though most ACOs have All Condition Readmissions rates in the 90th percentile, many have struggled with decreasing avoidable admissions for heart failure and COPD/asthma. In fact, more ACOs earned no points for Avoidable Heart Failure Admissions (ACO 10), than those that earned the maximum points for the fourth and fifth-best measures. Notably, CMS proposed retiring several components of the Diabetes and Coronary Artery Disease composites in the CY 2015 MPFS proposed rule. 

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