Shared savings — how much an ACO earns in incentive payments relative to its baseline — are not a good measure of financial success in the Medicare Shared Savings Program, according to a column published in Health Affairs.
These benchmarks are policy-oriented and cannot demonstrate the impact of the ACO, according to the authors, because they do not truly measure how much an ACO spent compared to how much its providers would spend if the ACO did not exist. This is due in part to the way the benchmarks are designed. For example, when setting benchmarks, CMS uses a weighted and risk-adjusted average of historical spending and projects future expenditures using national average spending growth data. However, spending growth is uneven — so performance set against these benchmarks could offer a distorted picture depending on where the ACO is located, the authors wrote.
Instead, researchers should compare ACO savings to a counterfactual baseline scenario, which can be difficult to design. Some scenarios created by analysts have shown CMS is losing money on the ACO program, while the analysis conducted by CMS itself suggests the opposite. The authors wrote more work is needed to establish a valid counterfactual scenario to measure true ACO performance.
"The bottom line is that we should not pay attention to any analysis that uses the benchmarks as the basis for assessing the effects of ACOs on Medicare spending," the authors conclude. "The benchmarks set the incentives and must be used by CMS to calculate shared savings bonuses, but they should not be used to evaluate impact."
Read the full column here.
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