Financial Performance of Accountable Care Organizations: A 5-Year National Empirical Analysis.

Goals: Of 513 accountable care organizations (ACOs) participating in the Medicare Shared Savings Program (MSSP) in 2020, 67% generated a positive shared savings of approximately $2.3 billion. This research aimed to examine their financial performance trends and drivers over time.

Methods: The unit of analysis was the ACO in each year of the study period from 2016 to 2020. The dependent variable was the ACOs' total shared savings earned annually per beneficiary. The independent variables included ACO age, risk model, clinician staffing type, and provider type (hybrid, hospital-led, or physician-led). Covariates were the average risk score among beneficiaries, payer type, and calendar year. The Centers for Medicare & Medicaid Services (CMS) public use files (PUFs) and a commercial healthcare data aggregator were the data sources.

Results: ACOs' earned shared savings grew annually by 35%, while the proportions of ACOs with positive shared savings grew by 21%. For 1-year increase in ACO age, an additional $0.57 of shared savings per beneficiary was observed. ACOs with two-sided risk contracting were associated with an average marginal increase of $109 in shared savings per beneficiary compared to ACOs with one-sided risk contracting. Primary care physicians were associated with the greatest increase in earned shared savings per beneficiary. In contrast, nurse practitioners/physician assistants/clinical nurse specialists were associated with a reduction in earned shared savings. Under a one-sided risk model, hospital-led ACOs were associated with $18 higher average shared savings earning per beneficiary compared to hybrid ACOs, while physician-led ACOs were associated with lower average saved shared earnings per beneficiary at -$2 compared to hybrid ACOs. Provider-type results were not statistically significant at the 5% nominal level. No statistically significant differences were observed between provider types under a two-sided risk model.

Practical applications: For all ACO provider types, building broader primary care provider networks was correlated with positive financial results. Future research should examine whether ACOs are conducting specific preventive screenings for cancer or monitoring conditions such as diabetes, hypertension, heart disease, obesity, mental disorders, and joint disorders. Such studies may answer health policy and strategy questions about the effects of incentives for improved ACO performance in serving a healthier population.