MSSP 2014 Results Analysis: Learning from the Winners, Losers & Savers

by Dr. Randall Williams, MD

CMS reported the results of the 2014 performance year for its MSSP program during the summer recess, with little fanfare or media critique. By publishing an organization-by-organization dataset, CMS has given us the opportunity to crowdsource the analysis.

The basic facts

CMS released the 2014 financial and quality data for 333 MSSP ACOs. These organizations were attributed 5.33 million beneficiaries in total and accounted for $52.6 Billion in Part A and Part B expense, or roughly $9,837 per beneficiary per year.

We’ve divided these organizations into three categories:

  • Winners (ACOs that captured a financial return for their effort by reaching the shared savings threshold)
  • Savers (ACOs that spent less than their benchmark but did not reap a share of the savings)
  • Losers (ACOs that actually spent more on their beneficiaries than their benchmark!)

First, a look at the Losers

Losing ACOs represented 46% of the total group, accounting for 49% of the total beneficiaries in the MSSP program. While there are some notable organizations in this group that have publically pronounced their support for patient-centered, value-based care, let’s call it for what it is. This group actually cost CMS in aggregate more than $683 million by spending that amount MORE than their benchmark. It turns out that the vast majority of these organizations will not owe CMS a dime, because they were Track 1, “upside only”, without payback risk. Sorry, my fellow taxpayers, we get to eat this one.

One oft-proposed reason for spending more than the benchmark is that the total expenditures per beneficiary were already quite low (due to such factors as local market conditions; already well-managed populations, etc.) However, that doesn’t appear to hold true in 2014. As a group, the Losers average expenditure per beneficiary was only $9,837, compared to $9,868 for the full MSSP program population. That means the total expenditure for these organizations was only 0.3% lower than the average for all ACOs. It’s hard to imagine that such a small cost difference would not leave room for further improvement. We’ll need to await CMS’s report on hospitalization rates to see if this group was really hamstrung by already low utilization rates.

Another (more cynical) hypothesis is that the ACOs unable to spend less than their benchmarks were actually hoping to increase services and collect more fees at a time when CMS is not yet placing them at financial risk. In other words, could these organizations be incented to actually spend MORE? Let’s look at the Pioneer ACOs for contrast. Pioneers all have downside risk, yet ¾ saved money compared to benchmark, and only ¼ spent more than benchmark. Whether intentional or unintentional, the lack of downside risk certainly seems to be leading to a large number of organizations spending more on care than their peers.

A look at the Savers

Meanwhile, 51% of beneficiaries and 54% of all ACOs actually saved money compared to benchmark. Of course, not all of these who saved actually were rewarded with a share of the savings. In fact, more than half of those generating savings did not receive a bonus. While CMS has been quoted as pointing out that the “majority” saved expenses, a deeper dive into the Savers and Winners revealed some fascinating findings. For starters, they actually saved a total of $975 million, or $360 per beneficiary, compared to their respective benchmark spend.

However, here’s the unreported fact: the cost per beneficiary was actually HIGHER for the Savers than for the Losers!  ($9,897 for Savers vs. $9,837 for Losers.) This finding implies that saving CMS money appears to be at least in part related to how high your benchmark is. In other words, you can utilize more care and still “save” when compared to a higher benchmark than your peers.

And now, the Winners

Congratulations to the 86 ACOs (26% of the total) that reached the shared savings threshold, successfully reported/ improved quality scores and were financially rewarded for their work. But here’s a challenging as yet untold secret. The Winners actually spent more per beneficiary than the Losers (and the Savers) at $9,906 per year!  At first blush, this math suggests that the Winners won by having the unfair advantage of a higher benchmark than their peers. We hope this is not the case, but until CMS releases detailed utilization data for these groups, I find it hard to believe that the Winners, as a group, spent more, while having lowered utilization than those that did not win.

What’s wrong with this picture and what should CMS do?

After three years of evaluation for the Pioneer program and two years of evaluation of the MSSP results, CMS needs to make some important changes to their financial savings reconciliation methodology. My colleagues and I can’t fathom a sustainable program where winners are actually spending more per beneficiary than losers. Clearly, organizations like NAACOS and others are lobbying hard for a better method of benchmarking that would include regional cost factors.

In the hopes of being constructive, here’s what we suggest to CMS: benchmark hospital utilization rates.  Organizations that achieve or maintain lower than expected admits/1,000 should be rewarded for doing so. Hospital utilization is a better metric to benchmark from than costs, since what we are looking to achieve is improved health at lower cost.  Reducing admissions and readmissions accomplishes both. And hospital utilization should not vary from region to region assuming ACOs are applying best practices to population based care delivery. A decrease in hospitalization rates would easily qualify, since it accounts for cost and improved health.

Another critical factor to correct is the perverse incentives that appear when “upside only” risk is employed. Here, we differ significantly from the views of NAACOS. Under the current “upside only” approach, some organizations may seek to game the system, by marketing and publicizing one’s organizational efforts to improve care while actually increasing costs! Gaming opportunities should be aggressively eliminated by CMS. CMS needs to move all MSSP ACOs to downside risk as soon as possible.  Even though many of those “gamers” will likely drop out of the program, taxpayers will not be on the hook for that increased expense generation.

We laud CMS for moving to improve these methodologic flaws, through such mechanisms as MSSP Track 3 and Next Generation.  Organizations looking to “do the right thing” as an ACO should consider either of these options for 2016.

What should ACO leaders do based on 2014 MSSP performance results?

Pharos is pleased to work directly with a large and growing number of MSSP ACOs. Thanks to their hard work and value-aligned motivation, ALL saved taxpayer dollars in 2014.  In fact, 75% of our MSSP clients were Winners, meaning that they also achieved shared savings bonuses (compared to 26% of all MSSP ACOs). As a group, our clients’ total expenditures per beneficiary were $9,467, significantly lower than other Winners ($9,906), even though our client’s benchmarks were also lower ($9,742). For our clients, achieving shared savings was not an accident; it was their mission.

Pharos clients have achieved success, despite some of the methodologic challenges of the MSSP program, due to five key factors:

  1. They are identifying segments of their population and regularly and repeatedly assessing them for increased utilization risk: groups with chronic conditions, hospital care transitions, and avoidable hospitalizations;
  2. They are engaging these “rising risk” individuals directly and frequently, using patient engagement technologies, to leverage care coordination interventions;
  3. They are attacking hospital utilization as the major driver of cost savings;
  4. They are documenting and improving quality of care to meet CMS’s reporting requirements;
  5. They are working to optimize in network care and decrease attribution churn.

In the coming weeks, we’ll be sharing a case study featuring one of our Winners so you can learn more about how they reached their shared savings goal. Until then, consider that it takes a long runway to plan and implement a strategy for reaching shared savings in 2016. You’ve got to start now and maximize the time available to you. We’d be happy to help – just request a complimentary Impact Analysis and we’ll show you how patient engagement can help you get on the Winner’s list for Performance Year 2016.


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Dr. Randall Williams, MDMSSP 2014 Results Analysis: Learning from the Winners, Losers & Savers

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