Dive Brief:
- Organizations in a discontinued Medicare accountable care model saved the program $372 million in 2022, more than five times the prior year, according to recent data from the CMS.
- Direct contracting entities in the Global and Professional Direct Contracting Model, which CMS replaced with another ACO model this year, had a 2% net savings rate on average.
- But there were major outliers among the 99 organizations. Bloom Health, a home-based primary care company in Colorado, notched the best net savings rate of 26.6%, while the worst net savings rate went to Northern California physician group Nivano Physicians, at -8.1%.
Dive Insight:
The defunct Global and Professional Direct Contracting Model allowed physicians offer more flexible benefits than traditional Medicare and accept either full or partial capitation as payment for coordinating patients’ care.
In 2022 — the model’s second and final year — more than three-fourths of participating DCEs created savings for Medicare. Overall, the results were an improvement over 2021, when 53 DCEs saved Medicare $70 million and the worst net savings rate for a single DCE was -29.4%.
The improvement was likely due in part to DCEs having more time to manage patient care, according to the CMS. In 2022, savings were measured over the entire year, as opposed to the nine months measured in 2021 due to disruption from the COVID-19 pandemic.
Taking on financial risk in Medicare can be extremely lucrative if organizations are able to manage their medical costs. More companies have been signing value-based deals to manage the care of Medicare seniors as a result, with the CMS reporting growing participation in accountable care organizations.
DCEs, which covered 1.8 million Medicare beneficiaries last year, created gross savings of almost $870 million. Of that, the CMS paid DCEs $484 million in shared savings.
Value-based primary care chains for seniors operated by major retail health players did particularly well.
Iora, a subsidiary of Amazon business One Medical, notched the highest net savings for a single organization with $37.7 million, and the second highest net savings rate at 21.4%.
CVS division Oak Street Health had the fourth highest net savings at $31 million, and the fifth highest net savings rate at 18.6%.
VillageMD, which is majority owned by Walgreens, operated six DCEs in separate states last year. DCEs’ individual savings rates ranged from 2.3% to 10.4%, but taken together VillageMD brought in $40.4 million in savings.
Net savings ranged from $38 million to a loss of $52 million, though most DCEs earned shared savings
DCEs operated by health systems were more split. One ACO operated by Utah-based nonprofit Intermountain Healthcare had one of the highest net savings amounts at $34.3 million, while another operated by regional California system Sutter Health had one of the lowest at a loss of $38.5 million.
There was also a significant amount of variance in results from DCEs operated by health insurers, though insurtech company Clover had the worst performance of any entity from a dollars perspective for the second year running. Clover also had the most beneficiaries in the program, showing the difficulties of managed care at scale — along with weaknesses in Clover’s operating model, experts commented on last year’s results.
The National Association of ACOs cheered the overall savings, with CEO Clif Gaus arguing in a statement the data “reaffirm the need to invest in alternative payment models.”
Many organizations stayed on when the model transitioned to a new structure called ACO REACH this year following backlash from progressive lawmakers concerned about the privatization of Medicare. ACO REACH has more stringent requirements around the screening, design and practices of ACOs, including a much stronger emphasis on provider-led organizations and addressing health disparities.
