Category Archives: savings

Federal Spending Increased Due to Medicare ACO’s

Once again, a topic previously discussed here has raised its head.

This time, it is the Medicare Shared Savings Program (MSSP), Medicare’s largest alternative payment model (APM).

Readers of this blog will recall previous posts about this topic. The first, from September 2015, Shared Savings ACO Program Reaps the Most for Primary-care Physicians reported that primary-care physicians were benefiting the most from the shared savings.

The next post, Challenges Remain in Physician Payment Reform, which followed on the heels of the first, discussed the challenges that remained in reforming physician payment, after then President Barack Obama (the good ole’ days) signed the Medicare Access and CHIP Reauthorization Act (MACRA) back in April.

MACRA repealed the Sustainable Growth Rate (SGR) mechanism of updating fees to the Physician Fee Schedule (PFS), and had been blamed for causing instability and uncertainty among physicians for over a decade, and that led to 17 overrides of scheduled fee cuts, at a cost of over $ 150 billion.

In Models, Models, Have We Got Models!, I suggested, rather strongly that all these models were not living up to their promise and was only creating more complexity, confusion, and dysfunction in an already dysfunctional health care system.

A post from January 2017, Illogical!, reported on yet another asinine model introduction by CMS at the Health Care Payment Learning and Action Network (LAN) Fall Summit by Adminstrator Seema Verna.

So when I received an email today from Dr. Don McCanne, former president of the Physicians for a National Health Plan (PNHP) that mentioned a press release from Avalere Health indicating that Medicare ACO’s have increased federal spending despite projections that said they would produce net savings.

According to the press release, the Medicare Shared Savings Program (MSSP) has performed considerably below the financial estimates from the CBO that was made in 2010 when the MSSP was enacted as part of the ACA.

Avalere’s press release said that this has raised questions about the long-term success of Medicare’s largest alternative payment model (APM).

The MSSP has grown from 27 ACO’s in 2012 to 561 in 2016, and most of them continue to select the upside-only Track 1, the release continued, which does not require participants to repay CMS for spending above their target.

As seen in the figure below, Avalere’s research found that the actual ACO net savings have fallen short of initial CBO projectios by more than $2 billion.

However, in 2010, the CBO projected that the MSSP would produce $1.7 billion in net savings from 2013 to 2016. Yet, it actually increased federal spending by $384 million over that same period, a difference of more than $2 billion.

Josh Seidman, senior vice president at Avalere said, “The Medicare ACO program has not achieved the savings that CBO predicted because most ACO’s have chosen the bonus-only model.”

Avalere also found that while the MSSP was overall a net cost to VMS in 2016, there is evidence that individual ACO performance improves as they gain years of experience. Avalere found that MSSP ACO’s in their fourth year produce net savings to the federal budget totaling $152 million, as shown in the next figure.

Avalere’s analysis also showed that the downside-risk models in the MSSP experienced more positive financial results overall. This indicates that there is potential for greater savings over time to CMS as the number of downside-risk ACO’s increase.

The upside-only model increased federal spending by $444 million compared to the downside-risk ACO’s $60 million over 5 years.

“While data do suggest that more experienced ACO’s and those accepting two-sided risk may help the program to turn the corner in the future, the long-term sustainability of savings in the MSSP is unclear. ACO’s continue to be measured against their past performance, which makes it harder for successful ACO’s to continue to achieve savings over time,” said Avalere’s director, John Feore.

The weird part is that despite the MSSP increasing federal spending, ACO’s are still reducing spending compared to projected benchmarks.

If you are increasing spending, then how can you at the same time be reducing spending? Isn’t this a health care oxymoron?

Which brings me back to my previous posts. CMS is a clusterfudge of programs, models, rules, regulations, and schemes that have done nothing to improve the health care system in the US. In point of fact, it has only added to the confusion, complexity, dysfunction, and wastefulness of a system no other nation has.

When are we going to wake up from this nightmare and deep six the market-driven disaster that is the American health care system? There are saner alternatives, but we are so mentally ill and obsessed with profiting from people’s illnesses that nothing changes.

Einstein was right. The definition of crazy is doing the same thing over and over again and expecting different results. We are crazy to continue with this mess.

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