ACO Winners and Losers

Last week, Medicare published its list of 2018 participants in the Medicare Shared Savings Program (MSSP) and the MSSP 2018 Fast Facts. Since its inception in 2012, the MSSP has grown from 220 Accountable Care Organizations (ACOs) with 3.2 million beneficiaries to 561 ACOs with 10.5 million beneficiaries. In light of the new data, we revisited the Performance Year results that Medicare published last October.

Harvard professor Dr. Ashish Jha published an assessment of the 2015 Medicare Shared Savings Program (MSSP) Public Use File (PUF) data on his blog last year. We replicated his analysis with MSSP PUF data from 2014 to 2016 and Next Generation PUF data from 2016, comparing the data over time to measure progress. Dr. Jha raised a handful of questions:

  1. How many organizations saved money and how many organizations spent more than expected?
  2. How much money did the winners (those that saved money) actually save and how much money did the losers (those that lost money) actually lose?
  3. How much of the difference between winners and losers was due to differences in actual spending versus differences in benchmarks (the targets that CMS has set for the organization)?
  4. Given that we have to give out bonus payments to those that saved money, how did CMS (and by extension, American taxpayers) do? All in, did we come out ahead by having the ACO program in 2015 – and if yes, by how much?
  5. Are ACOs that have been in the program longer doing better? This is particularly important if you believe (as Andy Slavitt has tweeted) that it takes a while to make the changes necessary to lower spending.

Question 1: How many ACOs came in under (or over) target

Question 2: How much did the winners save – and how much did the losers lose?


No. (%)BeneficiariesTotal Savings (Loss)
Winners181 (54.4%)2,711,091$974,704,176
Losers152 (45.6%)2,618,740-$683,226,331
No. (%)BeneficiariesTotal Savings (Loss)
Winners203 (51.8%)3,572,193$1,568,222,249
Losers189 (48.2%)3,698,040-$1,138,967,553
No. (%)BeneficiariesTotal Savings (Loss)
Winners241 (55.8%)4,232,664$1,697,849,782
Losers191 (44.2%)3,651,394-$1,045,906,131

Dr. Jha defined “winners” as organizations that spent less than their benchmark and “losers” as organizations that spent more than their benchmark. In 2016, 55.8% of ACOs generated savings, compared to 54.4% in 2014 and 51.8% in 2015. The number of attributed beneficiaries grew from 5.3 million in 2014 to 7.9 million in 2016, an increase of 48%. The absolute number of ACOs grew by approximately 30% between 2014 and 2016, and total savings grew from $291 million to $652 million, more than doubling.

Next Generation ACOs

No.(%)BeneficiariesTotal Savings (Loss)
Winners11 (61.1%)333,111$71,684,941
Losers7 (38.9%)138,623-$23,385,217

There are fewer Next Generation ACOs than MSSP ACOs, which limits the conclusions that can be drawn from their financial performance data. However, there were still more winners than losers among Next Generation ACOs and the net total savings in 2016 was $48.3 million.

Question 3: Did the winners spend less than the losers – or did they just have higher benchmarks to compare themselves against?


Per Capita BenchmarkPer Capita ExpendituresPer Capita Savings (Loss)
Winners (n=181)$10,257$9,897$360
Losers (n=152)$9,576$9,837-$261
Per Capita BenchmarkPer Capita ExpendituresPer Capita Savings (Loss)
Winners (n=203)$10,580$10,141$439
Losers (n=189)$9,601$9,909-$308
Per Capita BenchmarkPer Capita ExpendituresPer Capita Savings (Loss)
Winners (n=241)$10,685$10,284$401
Losers (n=191)$9,900$10,187-$286

As was the case in 2014 and 2015, the winners spent more money per capita then the losers in addition to having higher per capita benchmarks. The difference in benchmarks between winners and losers was $681 in 2014, $979 in 2015, and $785 in 2016. Meanwhile, the difference in expenditures ranged from only $60 in 2014 to $232 in 2015. Clearly, financial benchmarks are important determinants of whether an ACO makes savings. This is especially obvious in the 2014 and 2016 data, where the difference in per capita spending between the winners and losers was only 0.6% and 0.9% of average per capita expenditures.

From 2014 to 2016, the per capita benchmark and per capita expenditures for the winners grew by $428 and $387, translating to a 4.2% and 3.9 % increase, respectively. For the losers, these amounts grew by $324 and $350, translating to a 3.4% and 3.6% increase, respectively. In other words, though the growth in spending by the winners was higher in absolute terms, it was below the growth in their benchmark. Contrarily, the losers’ spending growth was lower in absolute terms, but still higher than relative growth in their benchmark.

Next Generation ACOs

Per Capita BenchmarkPer Capita ExpendituresPer Capita Savings (Loss)
The importance of the benchmark to Next Generation ACOs stands out just as it did for MSSP ACOs. The winners outspent the losers by $476 per capita, but their per capita benchmark was $860 higher. Net per capita savings were higher than for MSSP ACOs, $102 compared to $83.

Question 4: Did CMS come out ahead or behind?


 Total BenchmarkTotal ExpendituresSavings to CMSEarned Savings (Loss)Net Impact to CMS
2014$52,885 m$52,594 m$52,594 m$341 m-$50 m
2015$73,298 m$72,868 m$429 m$646 m-$216 m
2016$81,377 m$80,725 m$652 m$691 m-$39 m

Gross savings to CMS grew from $291 million in 2014 to $652 million in 2016, an increase of $361 million or 124%. Compared to total annual expenditures, ACOs generated savings of 0.6% in 2014 and 2015 and 0.8% in 2016. However, as Dr. Jha points out, CMS has to pay out shared savings to participating ACOs. The net impact of the program was still negative, at a cost of $39 million. Though a significant decrease from the program’s cost in 2015 of $216.3 million, it is similar to the program’s $50 million cost in 2014. Taken in context of the entire CMS budget – approximately $1 trillion – both the generated savings and net program cost are of negligible magnitude.

Next Generation ACOs

 Total BenchmarkTotal ExpendituresSavings to CMSEarned Savings (Loss)Net Impact to CMS
2016$5,149 m$5,101 m$48.3 m$38.0 m$10.3 m
Unlike the MSSP program, the Next Generation program did actually result in savings for CMS of $10.3 million. Again, taken in the context of the program, the savings paid out to participants and the net impact to CMS only represents a fraction of a percent of total expenditures by participants.

Question 5: Are ACOs that have been in the program longer doing better?


No.BeneficiariesExpendituresSavings (Loss)Earned Savings (Loss)Net Savings
No.BeneficiariesExpendituresSavings (Loss)Earned Savings (Loss)Net Savings
No.BeneficiariesExpendituresSavings (Loss)Earned Savings (Loss)Net Savings

The 2016 results largely confirm Dr. Jha’s observations about the 2015 data. Most of the savings were generated by the earlier cohorts. In particular, the 2012 cohort has maintained its level of savings across all three years, while the 2013 cohort is now in the black, moving from a net per capita loss of $60 in 2015 to net per capita savings of $48 dollars in 2016. The program still had a net per capita loss, but it was only $5, as compared to $30 in 2015 and $9 in 2014.

The data seem to suggest a few hypotheses about the ACO program. First, it might take a while for an ACO to “re-tool” how they deliver care and realize savings, as demonstrated by the 2013 cohort flip. However, the ACOs that realize savings might be self-selected in some way. Given the decrease in the number of ACOs in each cohort over time, we might worry that savings are an artifact of “good” providers staying in the program and “bad” providers dropping out. As shown above, however, being “good” or “bad” is largely determined by the benchmark, not absolute expenditures.

By |2018-01-10T20:12:07+00:00January 5th, 2018|Categories: Blog, Featured|

About the Author:

Ben Bigelow
Ben Bigelow is a data analyst at CareJourney. Ben earned his Masters degree in global health from the Harvard School of Public Health and his Bachelors degree in mathematics from the University of California, Davis.