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Table 1.  
Adjusted Differential Changes in Total Medicare Spending Per Beneficiary in ACOs vs Non-ACO Providers (Control Group) for Postcontract Years 2013 and 2014a
Adjusted Differential Changes in Total Medicare Spending Per Beneficiary in ACOs vs Non-ACO Providers (Control Group) for Postcontract Years 2013 and 2014a
Table 2.  
Net Savings to Medicare From the Medicare Shared Savings Program in the 2013 and 2014 Performance Years
Net Savings to Medicare From the Medicare Shared Savings Program in the 2013 and 2014 Performance Years
1.
McWilliams  JM, Hatfield  LA, Chernew  ME,  et al.  Early performance of accountable care organizations in Medicare.  N Engl J Med. 2016;374(24):2357-2366.PubMedGoogle ScholarCrossref
2.
Centers for Medicare & Medicaid Services.  Shared Savings Program. https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/sharedsavingsprogram/News-and-Updates.html. Accessed July 12, 2016.
3.
Douven  R, McGuire  TG, McWilliams  JM.  Avoiding unintended incentives in ACO payment models.  Health Aff (Millwood). 2015;34(1):143-149.PubMedGoogle ScholarCrossref
4.
McWilliams  JM, Chernew  ME, Dalton  JB, Landon  BE.  Outpatient care patterns and organizational accountability in Medicare.  JAMA Intern Med. 2014;174(6):938-945.PubMedGoogle ScholarCrossref
5.
Rose  S, Zaslavsky  AM, McWilliams  JM.  Variation in accountable care organization spending and sensitivity to risk adjustment.  Health Aff (Millwood). 2016;35(3):440-448.PubMedGoogle ScholarCrossref
6.
Centers for Medicare & Medicaid Services.  Revised benchmark rebasing methodology, facilitating transition to performance-based risk, and administrative finality of financial calculations. https://s3.amazonaws.com/public-inspection.federalregister.gov/2016-13651.pdf. Accessed July 12, 2016.
Research Letter
October 25, 2016

Changes in Medicare Shared Savings Program Savings From 2013 to 2014

Author Affiliations
  • 1Department of Health Care Policy, Harvard Medical School, Boston, Massachusetts
JAMA. 2016;316(16):1711-1713. doi:10.1001/jama.2016.12049

In the Medicare Shared Savings Program (MSSP), participating accountable care organizations (ACOs) are eligible for shared-savings bonuses from the Centers for Medicare & Medicaid Services (CMS) if spending for their patient population falls below a financial benchmark. In 2013, the first full year of the MSSP, modest spending reductions were entirely offset by bonus payments.1 Program savings beyond 2013 have not been formally evaluated.

Methods

For each year from 2009-2014, Medicare data for a random 20% sample of fee-for-service beneficiaries were analyzed. In each year, beneficiaries were attributed to an ACO based on the plurality of their office visits with primary care physicians.1 Difference-in-difference regression models were used to compare changes in total (Part A and B) Medicare spending for ACO-attributed beneficiaries from before to after the start of ACO contracts with concurrent changes for beneficiaries attributed to non-ACO providers (the control group). The precontract period was 2009-2011 for ACOs entering the MSSP in April or July 2012, 2009-2012 for ACOs entering in January 2013, and 2009-2013 for ACOs entering in January 2014. Differential changes in spending (estimated spending reductions attributable to the MSSP) were estimated separately for each entry cohort through each postcontract year, except 2012 was excluded as a transition year for the 2012 cohort. Model covariates included patients’ sociodemographic and clinical characteristics and fixed effects for each hospital referral region by year combination to adjust for local spending changes in the control group. Within cohorts, differential changes were estimated for subgroups of ACOs with baseline spending above vs below their region’s average and for independent physician groups vs ACOs financially integrated with hospitals. Detailed methods have been previously described.1 Analyses were conducted with SAS (SAS Institute), version 9.4. Statistical significance was defined as P value less than .05 for 2-sided tests.

Aggregate spending reductions or increases were calculated by multiplying per-beneficiary estimates by the number of beneficiaries in each ACO cohort, inflated by a factor of 5 to account for the 20% sampling. Net savings or losses to Medicare were calculated by subtracting bonus payments reported by CMS from aggregate spending changes.2

Results

The analysis included 25 544 650 beneficiary-years, with ACO-attributed patients accounting for 19% of annual samples on average. As in 2013,1 differences in patient characteristics between the MSSP and control groups were mostly small and changed minimally from the precontract to postcontract period. Precontract spending trends also were similar for the MSSP and control groups (Table 1).

In comparisons of the 2012 cohort with the control group, estimated spending reductions (Table 1) increased significantly (P = .008 for change) from 2013 (−$146/beneficiary or −1.5%; P = .03) to 2014 (−$264/beneficiary or −2.6%; P < .001). In the 2013 cohort, estimated spending reductions also significantly changed (P = .04) from 2013 ($3/beneficiary or 0.0%; P = .96) to 2014 (−$94/beneficiary or −0.09%; P = .07). In the 2014 cohort, an estimated spending reduction of −$49/beneficiary (−0.5%) in 2014 was not statistically significant (P = .27). In subgroup analyses, spending reductions in 2014 were driven largely by ACOs with baseline spending above their region’s average and by independent physician groups without financial ties to hospitals (Table 1).

In 2013, bonus payments exceeded aggregate spending reductions, constituting a net loss of $73.5 million to Medicare (Table 2). In 2014, aggregate spending reductions across all 3 cohorts exceeded bonus payments, constituting a net savings of $287 million to Medicare, or $67 per ACO-attributed beneficiary (0.7% of total spending for ACO-attributed beneficiaries).

Discussion

By 2014, spending reductions in the MSSP exceeded bonus payments, suggesting that shared-savings contracts without downside risk for excess spending—in which 95% of MSSP ACOs currently participate—may be a fiscally viable alternative payment model for Medicare. The growth in MSSP savings suggests continued growth may be possible, particularly if incentives for ACOs to lower spending are strengthened,1,3,4 though results may not generalize to future years and cohorts. Findings from subgroup analyses suggest that physician-hospital integration is unnecessary for ACO success and that CMS’s plan to lower benchmarks for ACOs with high spending toward a regional average should proceed cautiously, lest the MSSP lose its most valuable participants.5,6

Section Editor: Jody W. Zylke, MD, Deputy Editor.
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Article Information

Corresponding Author: J. Michael McWilliams, MD, PhD, Department of Health Care Policy, Harvard Medical School, 180 Longwood Ave, Boston, MA 02115 (mcwilliams@hcp.med.harvard.edu).

Published Online: September 9, 2016. doi:10.1001/jama.2016.12049

Conflict of Interest Disclosures: Dr McWilliams has completed and submitted the ICMJE Form for Disclosure of Potential Conflicts of Interest and he reports serving as a consultant to Abt Associates in an evaluation of the ACO Investment Model and as an expert witness to the Federal Trade Commission.

Funding/Support: This work was supported by grant P01 AG032952 from the National Institute on Aging of the National Institutes of Health (NIH).

Role of the Funder/Sponsor: The funder played no role in the design or conduct of the study; collection, management, analysis, or interpretation of the data; preparation, review, or approval of the manuscript; or decision to submit the manuscript for publication.

Additional Contributions: The author thanks Pasha Hamed, MA, for statistical programming support and Jesse B. Dalton, MA (both from Department of Health Care Policy at Harvard Medical School), for research assistance. They were supported by the funding source and received no additional compensation.

Disclaimer: The content is solely the responsibility of the author and does not necessarily represent the official views of the NIH.

References
1.
McWilliams  JM, Hatfield  LA, Chernew  ME,  et al.  Early performance of accountable care organizations in Medicare.  N Engl J Med. 2016;374(24):2357-2366.PubMedGoogle ScholarCrossref
2.
Centers for Medicare & Medicaid Services.  Shared Savings Program. https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/sharedsavingsprogram/News-and-Updates.html. Accessed July 12, 2016.
3.
Douven  R, McGuire  TG, McWilliams  JM.  Avoiding unintended incentives in ACO payment models.  Health Aff (Millwood). 2015;34(1):143-149.PubMedGoogle ScholarCrossref
4.
McWilliams  JM, Chernew  ME, Dalton  JB, Landon  BE.  Outpatient care patterns and organizational accountability in Medicare.  JAMA Intern Med. 2014;174(6):938-945.PubMedGoogle ScholarCrossref
5.
Rose  S, Zaslavsky  AM, McWilliams  JM.  Variation in accountable care organization spending and sensitivity to risk adjustment.  Health Aff (Millwood). 2016;35(3):440-448.PubMedGoogle ScholarCrossref
6.
Centers for Medicare & Medicaid Services.  Revised benchmark rebasing methodology, facilitating transition to performance-based risk, and administrative finality of financial calculations. https://s3.amazonaws.com/public-inspection.federalregister.gov/2016-13651.pdf. Accessed July 12, 2016.
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