Medicare ACOs May Be Slated For Big Changes — And Health IT May Be Part Of It

Before I get started, I want to offer a hat tip to Becker’s Hospital Review, which turned me onto the following news. That news, in brief, is that CMS might make changes to its ACO program that could have a big impact on the doctors and hospitals that participate.

According to Becker’s, CMS Administrator had some negative things to say about so-called “upside only” risk contracts, which don’t pay out anything to the agency if they miss financial and clinical benchmarks: “These ACOs are actually increasing Medicare spending, and the presence of these ‘upside-only’ tracks may be encouraging consolidation in the marketplace, reducing competition and choice for beneficiaries,” Verma told the AHA’s Annual Membership Meeting earlier this month.

At present, a whopping 460 of 561 ACOs in the Medicare Shared Savings Program are in Track 1, the agency’s upside-only program. At present, ACOs can only participate in two three-year contracts on this track, so next year 82 ACOs will be required to take on financial risk. Obviously, they don’t like this.

However, CMS isn’t exactly being unreasonable to consider curtailing Track 1. Looked at one way, the Medicare Shared Savings Program has failed utterly achieving its core purpose, and upside-only contracts are the primary reason.

According to Becker’s, which cited research from Avalere, while the program was supposed to generate $1.7 billion in net savings from 2013 to 2016, upside-only contracts were responsible for $444 million in federal spending. On the other hand, downside-risk ACOs cut spending by $60 million, a relatively tiny number when you consider the scale of CMS’s budget but positive side nonetheless.

All that being said, let me interject here and note that HIT may be part of the problem. I’m betting some of the expected savings was based on assumptions about how health IT would help ACOs meet clinical and financial benchmarks.

After all, the federal government spent many billions of dollars paying doctors and hospitals Meaningful Use incentive, which obviously gave them a convincing reason to adopt EMRs. No one approves that level spending without believing it would make everything better.

As it turns out, though, that might have been a flawed assumption. If I’m right, the Track 1 failure suggests that health IT isn’t doing as much to create efficiencies as federal health leaders had hoped. I know, particularly if you’re a doctor reading this, you’re saying “I could’ve told you this a decade ago.” Still, it’s worth repeating.

While health IT organizations — especially those housed in progressive health systems — are making great progress with improving care, we haven’t met the lofty goals of such approaches by any means. But if they want to progress toward value-based care, they’ll probably have to put their health IT to better use.

About the author

Anne Zieger

Anne Zieger

Anne Zieger is a healthcare journalist who has written about the industry for 30 years. Her work has appeared in all of the leading healthcare industry publications, and she's served as editor in chief of several healthcare B2B sites.

1 Comment

  • Its not a NET savings…this is why everyone is quitting ACOs. The COSTS of setting up, maintaining and administering the ACO is NEVER counted in the EXPENSE side on CMS “Savings”
    They are VERY complicated and expensive to run implement maintain and administer.
    Hence why all the BIG ACO advocates have already quit the game. Even the original gangster Dartmouth has left the scene.
    Look at ANY ACO article about savings. The administrative costs are NEVER factored in. Ever.
    Its HMO in new clothes. It just doesn’t work.

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