NYS Medicare ACOs Generated Savings in 2017 After Large Losses in Prior Two Years, But CMS Program Still Lost Money

Of the 32 ACOs in state’s Medicare Shared Savings Program, 17 saved money over benchmark levels, 15 reported losses 

NEW YORK, NY—May 16, 2019—New York accountable care organizations (ACO) participating in a Centers for Medicare and Medicaid Services (CMS) program to reduce Medicare spending generated nearly $11.5 million in total gross savings in 2017, after losing roughly $60 million in each of the two prior years. However, CMS still ended up about $40 million in the red—$75 per beneficiary—after accounting for the ACOs that reported losses, and distributing incentive payments to those that saved money, according to a United Hospital Fund (UHF) report released today. 

CMS started the Medicare Shared Savings Program six years ago to offer health care providers the opportunity to create an ACO that would be held accountable for the quality and cost of care of Medicare patients in return for a share of any savings generated. There are currently 32 Medicare ACOs in New York serving over 500,000 Medicare beneficiaries, about 30 percent of the state’s total Medicare fee-for-service beneficiaries. In 2017, 13 of these ACOs received nearly $52 million in shared savings incentive payments, up from five in 2016, while 15 ACOs reported losses. The other 4 ACOs generated savings, but not enough to quality for incentive payments. 

The report revealed strikingly large year-to-year variations in financial performance among the state’s ACOs: between 2016 and 2017, six increased their savings against their benchmarks by $9 million or more—and two increased their losses by more than $9 million.

“The provider groups participating in the Medicare ACO program are not a random sample. They include many of the state’s strongest and most advanced physician groups and hospital-led delivery systems,” said Gregory C. Burke, director of UHF’s Innovation Strategies program and author of the report. “If these organizations are having trouble generating savings, it is not clear how the remainder of the state’s providers will fare under such value-based payment programs.”

UHF has been following the performance of New York’s Medicare ACOs since the program started, regularly analyzing CMS data on performance. This report focuses on 2017 cost and quality results and reveals that, although physician-only ACOs performed somewhat better than those co-led by hospitals, there were no clear predictors of a successful ACO. 

Two of the 32 ACOs reported substantially greater savings than the rest—physician-owned Balance ACO, with $38 million in savings over its benchmark, and NewYork Quality Care (a joint initiative of NewYork-Presbyterian, Columbia College of Physicians and Surgeons, and Weill Cornell Medical College), with nearly $18 million in savings. The two lowest-performing ACOs in 2017 were Beacon Health Partners, with a loss of over $37 million, and Mount Sinai Care, with a loss of $22 million. The remaining organizations were closely clustered, ranging from a savings of $12 million to a loss of $12 million. 

“As Medicaid and commercial payers move aggressively to adopt value-based payment approaches, New York’s experience with Medicare’s ACO program offers some relevant lessons,” said UHF president Anthony Shih, MD, MPH. “Although the recent improvement in ACO financial performance is encouraging, progress is slow, and the expansion of similar value-based payment systems may not yield rapid improvements in cost and quality in New York.”

In light of new CMS regulations mandating the assumption of more financial risk by Medicare ACOs, set to be phased in over the next few years, the report suggests that provider groups currently participating in the “shared savings only” model will need to evaluate whether to continue in the program. 

The report, New York’s Medicare Accountable Care Organizations Improve Performance in Year 5 of the Medicare Shared Savings Program, can be downloaded from UHF’s website. This work was supported in large part by The Peter and Carmen Lucia Buck Foundation.

About United Hospital Fund
United Hospital Fund works to build a more effective health care system for every New Yorker. An independent, nonprofit organization, we analyze public policy to inform decision-makers, find common ground among diverse stakeholders, and develop and support innovative programs that improve the quality, accessibility, affordability, and experience of patient care. For more on our initiatives and programs, please visit our website at www.uhfnyc.org and follow us on Twitter. 


May 16, 2019
Focus Area
Coverage and AccessQuality and Efficiency
Innovation Strategies