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By Athena Mandros

In August, the Centers for Medicare and Medicaid Services (CMS) released the latest round of performance results for the Medicare accountable care organization (ACO) programs (see Medicare Accountable Care Organizations 2015 Performance Year Quality and Financial Results).

CMS estimates that, in total, the Medicare ACO programs produced $466 million dollars in savings during 2015, representing .0007% of the $648 billion in Medicare spending (ACO payouts have exceeded savings resulting in a program net loss). During that period, CMS paid $645.5 million in ACO bonuses. But, those savings and bonus payments vary across ACOs.

(For a refresher on Medicare ACO programs, their structures, their reimbursement models, and their performance requirements, check out How Is The Medicare ACO Performance Payment System Structured?: An OPEN MINDS Market Intelligence Report.)

We analyzed the data available on the current Medicare ACO market to get a better understanding of that landscape. Here’s what we found:

  • Currently, there are 460 Medicare ACOs, including 433 Medicare Shared Savings Program (MSSP) ACOs (411 Track One, 6 Track Two, and 16 Track Three), nine Pioneer ACOs, and 18 Next Generation ACOs.
  • In 2015, the third performance year, 119 (27%) of the MSSP ACOs received a share of the savings generated and no ACOs owed CMS losses for exceeding benchmark costs. Of the ACOs that were eligible for a share of the savings, they received an average payment of $5.4 million.
  • In 2015, six out of the 12 Pioneer ACOs received a share of the savings generated, and one ACO owed CMS losses. On average, the ACOs received $5.7 million in savings.

Three MSSP ACOs stand out to me for successfully receiving a share of the savings every performance year, while also consistently ranking among the top earners: Memorial Hermann Accountable Care Organization, Palm Beach Accountable Care Organization, and RGV ACO Health Providers.

Memorial Hermann Accountable Care Organization: Based in Houston, Texas, Memorial Hermann is a MSSP Track One ACO (only eligible for a share of the savings, but not losses) and the top earner of shared savings in the Medicare MSSP program for all three years. The organization earned savings of $41.9 million in 2015, $22.7 million in 2014, and $28.3 million in 2013. Memorial Hermann is a large health system with 16 hospitals, and its ACO is comprised of a network of ACO professionals’ individual practices; partnership or joint-venture arrangements between hospitals and ACO professionals; and a hospital employing ACO professionals (see Memorial Hermann ACO).

Palm Beach Accountable Care Organization (PBACO): A MSSP Track One ACO located in Palm Springs, Florida, PBACO is the second-highest earner of shared savings in the MSSP program for all three years. They earned savings of $36.8 million in 2015, $14.5 million in 2014, and $19.4 million in 2013. PBACO is an independent organization that brings together a network of health care providers to participate in an ACO (see Palm Beach Accountable Care Organization).

RGV ACO Health Providers: RGV is the only Track Two ACO (eligible for both a share of the savings and losses generated) to make the list of top ACO earners, and it has achieved that for three years running. Based in Donna, Texas, the organization earned savings of $12.6 million in 2015, $7.5 million in 2014, and $11.9 million in 2013. RGV is an independent organization that brings together a network of health care providers to participate in an ACO (see RGV ACO Health Providers).

What are my takeaways from learning about these top ACOs?

1. Bigger Is Usually Better, But Not Always

Both Memorial Hermann and PBACO are large organizations that have anywhere from 50,000 to 61,000 beneficiaries assigned to their ACO. A look at the top 10 ACO earners reveals that most have more than 20,000 beneficiaries and, on average, serve 57,200 beneficiaries. Comparatively, MSSP ACOs that were not in the top 10 in earnings and received no savings had 18,500 assigned beneficiaries on average. (RGV is the anomaly in this case, as it serves less than 10,000 beneficiaries each year, yet consistently turns in top numbers among ACOs.)

2. The Best Tend To Invest Part of Savings In Infrastructure

Both RGV and PBACO invest a large portion of their savings back into the ACO, at 30% and 25%, respectively. This funding goes toward refining care processes and adding new resources, like software systems that can manage health care data. Memorial Hermann invests a much smaller portion of their savings — only 6% — in infrastructure. This might be because it operates at such a large scale; the organization could already have the infrastructure in place to efficiently coordinate care.

We’ve covered the importance of ACO and population health management infrastructure in earlier reports — see CMS Announces Modifications To ACO Investment Model To Increase Rural & Small Group Participation, Leadership Evolution Needed For Successful Population Health Management, and Making The Connection Between Health Care Costs & Social Support Services.

For more on the ACO landscape, be sure to check out our just-released market intelligence (see The 2016 OPEN MINDS Medicare ACO Update: A Three-Year Trends Report). It provides a unique, three-year look back on Medicare ACO performance and compares the results, including a list of the top 10 ACO performers across the country.

Other important market metrics in the report include:

  • Year-by-year numbers for Medicare ACOs since 2012
  • Medicare shared-savings formulas for each ACO model for every year since 2012
  • Medicare beneficiaries by ACO model and year
  • Medicare ACO shared-savings payments and penalties since 2012
  • Lists of the ACOs receiving shared-savings payments and those paying penalties, with their enrollment and payment amounts since the start of the program

Organizations with Premium- and Elite-level subscriptions to the OPEN MINDS Circle can download the report today — and keep tabs on the ACOs in their market.

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