Number of Medicare ACOs stays flat, but risk-taking increases

• The number of Medicare Shared Savings Program ACOs remained little changed from last year.
• The share of ACOs facing no downside risk plunged from 91% in 2017 to 26% in 2020.
• Next Generation ACOs went from saving money for Medicare in their first year to amounting to a net loss in the second year.

The total number of Medicare accountable care organizations (ACOs) operating in 2020 changed little from the previous year, but significantly more are taking on financial risk.

The Medicare Shared Savings Program (MSSP) — the main Medicare ACO program — has 517 ACOs operating in 2020, which is one fewer than last year, according to Medicare data. The number also is down from a high of 561 two years ago, before the Trump administration changed the rules to require more financial risk from participants.

Senior Trump administration officials repeatedly said they did not mind if the program shrank as long as more ACOs moved from the risk-free upside-only track into risk categories, which officials said were more likely to drive providers to change their approaches to care. Subsequently, participation in the no-risk track has trended downward:

• 91% of all MSSP ACOs in 2017
• 82% in 2018
• 26% in 2020

“The number of ACOs with real accountability has more than doubled over the past year. This will translate to lower costs and higher value for Medicare beneficiaries and taxpayers,” Seema Verma, administrator of the Centers for Medicare & Medicaid Services (CMS), wrote in a blog post.

Why enrollment flatlined

The stagnant enrollment drew criticism from an ACO advocate.

“NAACOS feared that changes CMS made under Pathways would throw off the careful balance of risk and reward for too many ACOs,” Clif Gaus, president and CEO of the National Association of Accountable Care Organizations (NAACOS), said in a statement. “Sadly, those fears may be coming true. To date, there have been few attractive alternative payment models besides ACOs, so harming participation in the Medicare Shared Savings Program hurts Medicare’s priority of changing how it pays for care.”

Another ACO expert, David Muhlestein, PhD, JD, chief research officer for Leavitt Partners, said MSSP appears “kind of stagnant in terms of participation” as organizations try to find ways to succeed with two-sided risk.

“With the advent of direct contracting and the primary cares programs, some current ACOs may switch to those other programs,” Muhlstein said. Other major developments for the MSSP included:

• The addition of 53 new ACOs in 2020, compared with an annual average increase of 107 from 2012 to 2018
• The departure of 16% of ACOs in 2019, compared with an 11% average annual attrition rate (40% of departing participants in 2019 returned as a different type of ACO)
• Renewal of participation by 100 ACOs
• Coverage of 11.2 million Medicare beneficiaries by ACO providers, compared with 10.4 million in 2019

Next Gen savings appear to dry up

The Next Generation ACO (NGACO) program, which includes fewer entities and requires taking on much larger financial risk, appeared to stumble in its ability to save Medicare money.

An independent evaluation of the 50 NGACOs found that with bonus payments included, the program increased Medicare spending over its first two years by $93 million. That was a reversal from the first year, when evaluators found that NGACOs saved Medicare $86 million.

CMS plans to release third-year NGACO results in mid-2020, a spokesman said.

The evaluation was considered flawed by ACO advocates because it compared NGACO spending to Medicare spending in other markets, including those with MSSP ACOs.

“We know these ACOs save money, but this evaluation was set up in a way they were destined to fail,” said one advocate.

Verma noted that the years that have been evaluated were before the Trump administration implemented a series of changes to NGACOs.

“Data from additional years, particularly after implementation of the improvements to the financial methodology, are needed before the full impact of the NGACO model can be determined,” Verma wrote.