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Physician-Led Accountable Care Organizations Outperform Hospital-Led Counterparts

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Medicare ACOs continue to realize experience-level results.

New analysis from Avalere finds that physician-led accountable care organizations (ACOs) in the Medicare Shared Savings Program (MSSP) outperformed hospital-led ACOs by a significant margin. Additionally, MSSP ACOs continue to achieve higher savings the longer they participate in the program. The MSSP is Medicare’s largest alternative payment model and seeks to transition Medicare away from fee-for-service payment into a new value-based environment. In 2018, 548 MSSP ACOs provided care to over 10 million Medicare beneficiaries and reduced Medicare spending by $739M.

Under the Pathways to Success changes to the MSSP, CMS now classifies ACOs as “low revenue” or “high revenue” based on a threshold of Medicare Parts A and B revenue for ACO participants that is associated with the ACO’s assigned beneficiaries. This distinction is made by CMS to classify ACOs as physician led or hospital led, respectively.

In 2018, 235 ACOs (43%) were considered low revenue; 313 ACOs (57%) were considered high revenue. Avalere’s analysis found that the low-revenue, physician-led ACOs performed significantly better than the high-revenue, hospital-led ACOs. On average, physician-led ACOs produced almost 7 times the amount of Medicare savings per beneficiary than hospital-led ACOs (Figure 1).

Figure 1. New Impact on Medicare Spending Comparison

“All ACOs strive to reduce spending while improving quality in the new value-based world,” said John Feore, associate principal at Avalere. “However, the financial incentives to reduce hospital spending are stronger for ACOs that don’t receive a substantial amount of revenue from hospital admissions.”

Avalere’s analysis also finds that ACOs in their first performance year increased Medicare spending, while all other ACOs reduced spending in 2018. The highest-performing ACOs were those with the most experience (Figure 2).

Figure 2. Net impact on medicare spending per beneficiary

“As we have found in previous research, ACOs with experience tend to perform better than newer ACOs,” said Gabriel Sullivan, consultant at Avalere. “The infrastructure investments required to start an ACO, along with the necessary care coordination efforts, beneficiary engagement, and provider education initiatives take time to produce results.”


Using the CMS 2018 Shared Savings Program Accountable Care Organizations PUF, Avalere estimated the net impact on Medicare spending from the MSSP and aggregated the results across the program, by each ACO’s experience with the program, performance year, and CMS’ categorization of “low revenue” and “high revenue.” “Net impact on Medicare spending” refers to the aggregate impact of program or benchmark-to-expenditure savings, shared savings payments, and shared loss payments. This reflects the financial impact to the federal budget as reported by CMS.

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