Why do some Medicare ACOs save money?

Preliminary data showing the Medicare Shared Savings Program (MSSP) saved more than $380 million in 2012, the agency didn't explain why some of the accountable care organizations generated a substantial portion of the cost savings.

In fact, 29 of the 114 ACOs that began in 2012 saved more than $129 million, earning them each bonus payments from the Centers for Medicare & Medicaid Services, FierceHealthcare previously reported. But what steps did those organizations take to produce such large cost savings?

Farzad Mostashari, the former National Coordinator for Health Information Technology, suggested "preliminary interpretations" of what led those 29 ACOs to success in a blog post for the Brookings Institution.

"The first year results from MSSP suggests Medicare ACOs are on the right track and with prudent evolution, can continue to move providers closer to greater accountability for healthcare costs and quality," Mostashari wrote.

First, he suggested physician-owned practices are more nimble. Some policy experts worried doctor-owned practices wouldn't generate substantial savings because they lack high enough utilization rates, capital, operational sophistication and staff resources. Despite those fears, 21 of the 29 successful Medicare ACOs were physician-led.

Although the exact reasons aren't certain, Mostashari said physician-led ACOs could have saved costs because they can more nimbly execute ACO principles, including improving patient care coordination, chronic disease management and preventive care.

Additionally, 20 of the 114 ACOs included in the first-year results received upfront and monthly payments. Six of those 20 ACOs achieved shared savings, likely because they could invest in and adopt the necessary technology to successfully transform their infrastructure.

Mostashari added that some evidence shows ACOs in the most expensive states are more likely to save costs. For example, Florida, Louisiana, Mississippi and Texas are the most expensive Medicare regions; they also account for 25 of the 114 ACOs.

To learn more:
- read the Brookings Institution blog post

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