Keeping the 2014 Medicare ACO Results in Perspective

Guest post by Ken Perez, vice president of healthcare policy, Omnicell.

Ken Perez
Ken Perez

“We have to take the long view, and be focused on iterating, evolving, and improving the concept, rather than seeking summary judgment.” – Farzad Mostashari, former national coordinator for health information technology, commenting on accountable care organizations

On Aug. 25, 2015, the Centers for Medicare and Medicaid Services (CMS) released 2014 financial and quality performance results for 353 accountable care organizations, 333 in the Medicare Shared Savings Program (MSSP) and 20 in the Pioneer ACO Model (although as of this writing, the CMS website only lists 19 Pioneer ACOs). As is customary, proponents (such as CMS) and critics of ACOs interpreted the results quite differently, as a glass half-full or half-empty.

Pioneer ACO Performance

During the third performance year, the Pioneer ACOs generated total model savings of $120 million. That figure constitutes a 24 percent increase versus the $96 million of savings produced during the previous year. A total of 15 ACOs (75 percent of all Pioneers) were able to generate savings during performance year three, compared with 14 ACOs (61 percent of all Pioneers) for the prior year. Of those generating savings in the most recent performance year, 11 Pioneers produced savings that exceeded the minimum savings rate, garnering shared savings payments totaling $82 million. One quarter of the 20 Pioneers generated losses, with three generating losses beyond a minimum loss rate, requiring them to make $9 million in shared-loss payments to CMS.

The Pioneers improved the quality of care delivered during performance year three, as their mean quality score rose from 85.2 percent to 87.2 percent year-to-year. The Pioneers improved in 28 of 33 quality measures and generated average improvements of 3.6 percent across all quality measures compared to Performance year two. CMS highlighted significant improvement in medication reconciliation (up from 70 percent to 84 percent), screening for clinical depression and follow-up plan (up from 50 percent to 60 percent), and qualification for an electronic health record incentive payment (up from 77 percent to 86 percent).

Moreover, Pioneer ACOs improved the average performance score for patient and caregiver experience in five out of seven measures compared to performance year two.

MSSP ACO Performance

During performance year 2014, 181 (54 percent) of MSSP ACOs were able to hold healthcare costs below their benchmark. This group grew from 118 (53 percent) for the prior year. Of the 181 ACOs with costs below their benchmark, 92 of them or 28 percent of all MSSP participants held spending $806 million under their targets and exceeded their minimum savings rates. As a result, these 92 ACOs earned shared-savings payments of $341 million. This compares favorably with performance year 2013, in which 58 (26 percent) of MSSP ACOs earned shared savings. Encouragingly, none of the very limited number of ACOs operating under track two — a two-sided model with downside risk—owed CMS losses.

As for quality performance, MSSP ACOs that reported in both 2013 and 2014 improved on 27 of 33 quality measures. CMS touted advances in patients’ ratings of clinicians’ communication, beneficiaries’ ratings of their physicians, screening for tobacco use and cessation, screening for high blood pressure, and use of electronic health records.


With multiple years of mixed results for the Medicare ACO programs, it should be clear that ACOs are the most challenging of the Patient Protection and Affordable Care Act’s healthcare delivery reforms. By definition, the ACO endeavor is one with both certain risk and potential reward. Indeed, to date, nine percent of MSSP and Pioneer ACOs have quit. At the same time, succeeding in the Medicare ACO programs is certainly not impossible, as a total of 103 ACOs—29 percent of all participants—earned total shared savings of over $422 million in 2014, an average of $4.1 million per ACO.

Taking the long view, CMS noted that in the MSSP, among those that entered the program in 2012, 37 percent generated shared savings during the most recent year, versus 27 percent of those that entered in 2013, and 19 percent of those that entered in 2014. In addition, CMS pointed out that in the Pioneer program, both total model savings and mean quality scores have risen successively during the three performance years. Thus, it is evident—given the financial and quality performance results of the Medicare ACO programs for the past few years—that learning, honing the craft of population health management, is a key ingredient in the recipe for ACO success.

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