From Kip Sullivan: Early in October CMS announced that its main ACO program, the Medicare Shared Savings Program, saved $739 million in 2018 after accounting for bonuses paid out to some ACOs and collecting penalties from a few others. CMS released a similar press release a year ago announcing smaller savings in 2017 (after announcing losses between 2012-2016).
What CMS has never bothered to announce is (a) the savings constitute a tiny fraction of Medicare spending on the Medicare beneficiaries assigned to ACOs (without their knowledge) and (b) these savings are much smaller than the overhead costs of the ACOs (I'm not even counting CMS's overhead in running that complex program).
According to an article in Medpage, the savings in 2018 equaled a mere $73 per beneficiary. https://www.
When we do the math, we discover the $73 per beneficiary savings in 2018 was half a percentage point of total Medicare spending on the 10 million beneficiaries assigned to ACOs in 2018.
According to MedPAC's staff, the average ACO has overhead of 2 percent of Medicare spending. (I suspect that's low.) Obviously, 2 percent is four times half a percent. ACOs, in short, are raising total spending.
The complete disinterest in administrative costs is par for the course for CMS and other managed care advocates. All the managed care schemes ever proposed -- from HMOs in the 1970s to "medical homes" in the 2000s to the Hospital Readmissions Reduction Program in the 2010s -- were proposed without any evidence on the administrative costs of these schemes. Managed care buffs suffer from terminal free-lunch syndrome.
Interestingly, Kaiser Health News yesterday summarized a Wall St J story about a GAO report saying Trump's wizards at HHS forgot to include administrative costs in their estimate of how much Medicaid would save if states added work requirements to their Medicaid programs. I have pasted in the blurb below. Notice the final bolded sentence.
Beats me why the GAO hasn't done this for all the managed care fads.