An examination of internal and external factors upon financial performance of participating ACOs in the Medicare Shared Savings Program (MSSP) for the year 2013

Noel Marie Pugh, The University of Texas School of Public Health


In April of 2014, CMS published year 1 performance of the Medicare Shared Savings Program (MSSP). Although CMS realized cost savings of nearly $254M associated with year 1 MSSP performance ($126M shared with providers), only one out of four participants received CMS’ shared savings. While MSSP Accountable Care Organization (ACO) leaders asked whether the program allowed requisite returns on investment to justify participation, members of the Pioneer Program (sister of the MSSP) cited CMS’ failure to adjust for regional factors as a chief cause for the lack of financial reward. Given that over one third of participants withdrew from the Pioneer program and the underwhelming first year rewards for most MSSP participants, organizational decision makers are in need of guidance as to what core ingredients create a successful shared savings program. This research seeks to answer the critical question: “What factors internal and external explain MSSP financial success and do any interactions exist among these factors that may better describe this success?” Secondarily, this research seeks to understand whether a modified network framework can assist ACOs leaders in understanding whether MSSP participation is appropriate in their environment. And, if so, what can be done to manage internal and external factors to encourage success in the program. This retrospective examination of Year 1 2013 MSSP participants, as well as state and county data, revealed that critics of the MSSP program may have been fair to suggest that regional factors can significantly impact MSSP performance. (143 ACOs were examined, 77 of the 220 participants were removed for outlier performance or multi-state beneficiary presence.) Specifically, linear regression (variables considered were derived from a modified network framework) revealed the interaction between county Medicare Advantage penetration and county mortality associated with heart disease is positively related to MSSP financial performance with lower observed to expected expenditure per beneficiary (p= .023). Additionally, ACO performance across cardiovascular disease management measures may be positively related to MSSP financial performance ( p =.045) when considering the interaction between county Medicare Advantage penetration and mortality associated with cardiovascular disease. Variables such as primary care access per 100K patients, county median household income, state health insurance exchange participation, and Medicaid expansion as well as mortality because of chronic lower respiratory disease and diabetes do not appear to be meaningfully related MSSP financial performance. Although the findings confirm participant suspicions and may serve to help us understand what contributes to MSSP success, chosen variables may not best tell the programs story. A study using area wage indices and mature state variables is needed. Median household income, considered in lieu of area wage indices as an approximate for cost of labor, does not contemplate actual costs a healthcare organization can expect to spend to employ a uniquely skilled workforce. Additionally, the impacts of immature variables, such as health insurance exchange participation and Medicaid expansion, have yet to fully materialize and should be examined longitudinally. Moreover, future research should examine quality performance (patient satisfaction and care coordination), as well as participation in other population health strategies such as the Bundled Payments for Care Improvement (BCPI), and their effects upon MSSP financial success. Findings suggest that those participating in or considering the MSSP, should carefully select physicians who demonstrate an ability to deliver value-based care, invest in cost containment strategies around more expensive cardiovascular procedures and disease states, and execute catchment strategies to mitigate and prevent unnecessary inpatient utilization. Additionally, a modified network framework may be utilized by health care leaders to ascertain the appropriateness of shared savings participation. MSSP leaders may also use this framework to determine how to manage factors internal and external to an ACO to create an environment of financial success.

Subject Area

Health care management

Recommended Citation

Pugh, Noel Marie, "An examination of internal and external factors upon financial performance of participating ACOs in the Medicare Shared Savings Program (MSSP) for the year 2013" (2016). Texas Medical Center Dissertations (via ProQuest). AAI10126222.