UHF Report Examines Links Between the Performance and Characteristics of New York's Accountable Care Organizations

New York’s Medicare ACOs Outperform National Average on Quality, Lag on Cost Savings

Release Date: 04.18.2016
Contact: rdeluna@uhfnyc.org
Contact Phone: 212-494-0733

A new United Hospital Fund report examines the performance of New York’s accountable care organizations in Year 2 of the federal Medicare Shared Savings Program, finding that they lag the national experience on cost savings but outperform it on quality results. The report also considers several possible factors that may be contributing to the results.

In Year 2 of the program, only 19 percent of New York’s accountable care organizations qualified to receive shared savings, compared to 26 percent nationally. (New York’s aggregate savings for Year 2 were $1.7 million, a modest savings rate of 0.05 percent, and were down from Year 1, which had a smaller group of participants.) On quality, New York’s accountable care organizations achieved an aggregate score of 86.31 out of 100, higher than the national average of 83.08.

The report Performance of New York’s Accountable Care Organizations in Year 2 of the Medicare Shared Savings Program also looks for correlations, associations, and explanations for the different performance results of New York’s accountable care organizations in generating cost savings. It focuses on four characteristics: length of time in the program, number of beneficiaries, type of sponsorship, and location. While analysts have found at least some correlation nationally on each of the four characteristics, the report’s authors did not find that these same correlations hold true in New York.

“It’s premature to extrapolate trends from just the first two years of performance data, but of the four characteristics we looked at, the strongest correlation appears to hold for the question of sponsorship,” said Greg Burke, UHF’s director of innovation strategies and the report’s lead author. “But our findings are nuanced. The correlation appears to be less about the type of sponsorship—that is, whether an ACO is physician-operated or hospital-affiliated—and more about how tightly organized a system is—that is, the more formally and tightly organized a system is, the better it has performed financially.”

The report also examines the Medicare Shared Savings Program’s mechanics (i.e., specific definitions, formulas, and methodologies), which contribute to program results. Specifically, the report focuses on the process by which patients are attributed to accountable care organizations, the way in which the minimum savings rate is calculated and applied, and—“probably the single greatest factor contributing to an accountable care organization’s success in generating savings”—the way benchmark measures are established and updated.

As one example, under the federal program’s original rules, an ACO’s benchmark (its expenditure target against which it is competing) was updated annually to reflect a three-year rolling average of its costs and performance, with its most recent year weighted at 60 percent, and the two prior years at 30 percent and 10 percent, respectively. This had the effect of setting a demanding standard for receiving continued shared savings for an ACO that had performed very well in a given year, by changing the benchmark for the following year to a substantially lower figure. The report notes that the Centers for Medicare and Medicaid Services has moved to address this and a number of other concerns in its June 2015 update, as part of its efforts to enable the high-performing organizations and the overall program to succeed.

“The lessons from the performance of New York’s organizations in this program are important not just because Medicare is so vital for so many older and disabled New Yorkers, but also because of the program’s overlapping goals with other reform initiatives underway—including, in New York, the Delivery System Reform Incentive Payment program and the Value-Based Payment Roadmap,” said UHF President Jim Tallon. “These programs address different payers and beneficiaries, but they all aim to create integrated delivery systems, and the lessons learned in one should illuminate things to watch for in the others.”

The report Performance of New York’s Accountable Care Organizations in Year 2 of the Medicare Shared Savings Program was written by Mr. Burke and Suzanne Brundage, senior health policy analyst. It is available from UHF’s website at http://www.uhfnyc.org/publications/881114.

Support for this work was provided by the New York State Health Foundation.

About United Hospital Fund: United Hospital Fund is an independent, nonprofit organization working to build a more effective health care system for every New Yorker.

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