Thursday, January 29, 2015

Of Medicare Shared Savings Program (MSSP) ACOs, Start-Up Costs, Preliminary Financials and Data Support

The Disease Management Care Blog didn't know there was a "National Association of ACOs" either, but they've just released results from a "web" survey of the organization member ACOs that are participating in the Medicare Shared Savings Program.  You can read more about the Program here

Of the total number of 123 MSSP participants, 35 anonymously participated in the survey. Their covered beneficiary numbers ranged from 5,100 to 78,000.

Among the findings:

Start up costs in the first year of operation averaged $2 million, with a range from $300,000 to $6.7 million.  With continued operations, the average cost over two years was $3.5 million. Total capital needs averaged $4 million.

While Medicare has yet to release any formal financial results, the ACOs' estimated results showed that 13 guessed they would break even. Nine will gain an average of $1.3 million and six will lose $1.3 million.  Six had no estimates, while other gains and losses ranged from positive $9 million to negative $10 million, respectively.

The biggest problem? "CMS data and learning to access it and process it."  This required pricey information technology with an average of $413,000 internal and $443,000 external costs.

The DMCB's take:

Running an integrated delivery system or physician-hospital organization as part of an ACO is a very expensive and capital intense enterprise.  Given the additional costs of new technology, electronic records and personnel, some of the ACOs may not be able to afford the loss of millions of dollars.  It remains to be seen how Medicare will handle the downside of hospital lay offs or clinical program discontinuations among some of the MSSP participants.  Will members of Congress have to get involved on behalf of their local constituents?  Stay tuned!

As the disease management industry learned, it's one thing to "save money," it's another to save money in excess of fees plus program costs.  $3.5 million over two years is a lot of money to make up before you break even, making the DMCB wonder if cheaper programs (such as population health management) with a more modest scope (such as reducing readmissions) may have a better long term value proposition. Once again, stay tuned.

And the Disease Management Care Blog predicted there'd be problems with the data feeds here.  Recall that one of the problems with the Medicare Health Support program were "execution" problems with the timely provision of utilization data from CMS.  ACOs - and the Medicare beneficiaries they're taking care of - deserve better. 

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