Next Generation ACOs Saved Medicare $558M in 2019

Accountable care organizations (ACOs) taking on the greatest financial risk in Medicare through the Next Generation ACO Model saved the public payer over $558 million in 2019, according to partial data from CMS.

CMS released the data yesterday on 37 of the 41 Next Generation ACOs participating in 2019. The data excluded savings and quality data from four ACOs that deferred financial settlement for last year’s performance period.

CMS plans to release full 2019 performance results for all 41 Next Generation ACOs in the spring of 2021 after financial settlement is complete.

So far, the data shows that Next Generation ACOs reduced Medicare spending on beneficiaries attributed to the providers while maintaining an average quality score of 93.7 percent out of a perfect score of 100, the National Association of ACOs (NAACOS) reported.

Most Next Generation ACOs earned shared savings payments as a result of spending reductions.

Thirty-five of the 37 ACOs represented in the partial data qualified for a shared savings payment based on 2019 performance. Shared savings payments paid out to the 35 ACOs totaled $472.8 million.

ACOs earning the highest payouts in 2019 included UT Southwestern Accountable Care Network with over $50.6 million in earned shared savings payments, UnityPoint Accountable Care L.C. with $41.9 million, Indiana University Health with $29.5 million, and Trinity Health ACO, Inc. with $24.3 million.

Only two of the Next Generation ACOs in the partial dataset owed Medicare after last year’s performance. The ACOs are CoxHealth Accountable Care, LLC, which generated $1 million in earned shared losses, and HCP California, LLC, which had $9.9 million in earned shared losses.

After accounting for shared savings paid out to ACOs that reduced costs and hit quality targets and earned shared losses, the 37 Next Generation ACOs produced net Medicare savings of $204 million in 2019, NAACOS found.

In comparison, Next Generation ACOs saved Medicare $406 million in 2018 and netted the program $185 million after shared savings and losses.

“For every year of the program, Next Gen ACOs yielded savings for Medicare money while also showing an improvement in quality. Very few programs CMS has developed over the years can say that,” said Clif Gaus, ScD, president and CEO of NAACOS.

In response to the partial 2019 performance results, NAACOS echoed its call to make the Next Generation ACO Model a permanent program within Medicare, either as a stand-alone program or an option in Medicare’s largest ACO model – Shared Savings Program.

The Next Generation ACO Model was originally slated to sunset at the end of 2020, but CMS extended the Model through the end of 2021 because of the COVID-19 pandemic.

CMS recently launched the Direct Contracting Model, which builds on the Next Generation ACO Model and is considered a natural next step for Next Generation ACOs.

Under the Direct Contracting Model, participants form ACO-like entities that assume responsibility for the clinical outcomes and costs of attributed beneficiaries. These “Direct Contracting Entities” then enter risk-based contracts with CMS with the goal of reducing Medicare spending and improving quality of care and outcomes for patients. Direct Contracting Entities can assume up to 100 percent savings/losses.

CMS says the direct contracting options will test the “next evolution of risk-sharing arrangements” to see whether they can increase the value and quality of care and attract a broader range of healthcare stakeholders to participate in value-based care models.

Currently, there are 51 Direct Contracting Entities participating in the implementation period of the Direct Contracting Model, which runs through March 31, 2021.

Even as CMS prepares to end the Next Generation ACO Model, the latest results underscore the strong foundation of the ACO model, says Michael Polen, senior vice president and CEO of Medicare Solutions for Centene Corporation, operator of one of the largest Medicare ACO sponsors Collaborative Health Systems.

“The ACO model provides a framework for efficient, and more importantly, effective healthcare spending,” Polen said in a press release highlighting Collaborative Health Systems’ $33.2 million in Next Generation shared savings in 2019.

NAACOS and other industry groups, including America’s Physician Groups and Premier, have been pushing CMS to make the Next Generation ACO Model permanent. The Model has demonstrated both spending reduction and quality improvement and should, therefore, be certified as a permanent Medicare program, the groups have argued.