Why Do Accountable Care Organizations Leave The Medicare Shared Savings Program?

May 7, 2019

The ability of accountable care organizations (ACOs) to continue reducing costs and improving quality depends on understanding what affects their survival. We examined such factors for survival in the Medicare Shared Savings Program (MSSP) of 624 ACOs between performance years 2013 and 2017 (1,849 ACO-years). Overall, ACO exits from the MSSP decreased after ACOs’ third year. Shared-savings bonus payment achievement, more care coordination, higher financial performance benchmarks, market-level Medicare cost growth, lower-risk patients, and contracts with upside-only risk were associated with longer survival. Quality scores, postacute care spending, organizational traits, and most market-context characteristics had no significant association with survival, which indicates that diverse organizations and markets can be successful. Put in context with the recently finalized MSSP rule from December 2018, our findings suggest that while new flexibilities for low-revenue ACOs likely reduce uncertainty for some, MSSP ACOs may need more than the new period of one to three years to prepare for downside risk. Policy makers should offer more support to ACOs (especially those with higher-risk patients) for building organizational competencies and should consider how benchmarking policy can fairly assess ACOs from regions with differing levels of cost growth.

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