Accountable Care Organization Efficiency on Entry and Shared Savings Bonuses

Area of Science:

• Health Policy
• Health Economics
• Healthcare Management

Background:

• Medicare Shared Savings Program (MSSP) benchmarks previously favored historical spending, potentially disadvantaging efficient Accountable Care Organizations (ACOs).
• Evolving benchmark calculations, including regional spending adjustments in 2017, aimed to better reward ACO efficiency.
• The impact of these benchmarking policy changes on ACO financial performance across efficiency levels remained unclear.

Purpose of the Study:

• To assess the association between an ACO's initial efficiency and its likelihood of earning shared savings bonuses.
• To determine how the 2017 regional benchmark adjustment influenced this association.

Main Methods:

• Cross-sectional study using a 20% national sample of Medicare claims from 2013-2020.
• ACOs were categorized into quartiles based on their initial observed-to-expected spending ratio (efficiency).
• Multivariable logistic regression analyzed the relationship between efficiency quartiles, shared savings bonuses, and the impact of the 2017 policy change.

Main Results:

• Across 402 ACOs, the median spending ratio was 1.000.
• The most efficient ACOs showed an increased probability of earning bonuses after the 2017 adjustment (24.4% to 45.2%).
• However, the least efficient ACOs consistently had significantly higher odds of earning bonuses both before (43.8%) and after (60.7%) the policy change, with no narrowing of this gap.

Conclusions:

• ACOs across the efficiency spectrum had improved odds of earning bonuses post-2017 regional adjustment.
• Less efficient ACOs consistently demonstrated significantly greater odds of earning bonuses compared to more efficient ACOs.
• Current benchmarking policies in the MSSP may not adequately incentivize or reward higher levels of ACO efficiency.