Michigan ACOs reap profits for Medicare, doctors, hospital Systems

-Accountable care organizations earned back nearly $130 million last year, up from 2018
-State’s ACOs averaged 94 percent quality rating for seniors
-Top sponsoring systems for ACOs are Affirmant, University of Michigan, Beaumont and McLaren

Beaumont Health
Belal Abdallah
Michigan’s top accountable care organizations saved tens of millions for the traditional Medicare program, increased quality for seniors and returned substantial financial benefits to participating doctors and hospitals.

Medicare ACOs are groups of doctors, hospitals and other health care providers who come together voluntarily to provide coordinated high-quality care to Medicare patients outside of managed care programs. The goal of coordinated care is to ensure that patients, especially the chronically ill, get the right care at the right time, while avoiding unnecessary duplication of services and preventing medical errors.

In 2019, the state’s top ACOs received $129. 3 million in shared savings under the Medicare Shared Savings Program, one of the most successful programs created by the Affordable Care Act of 2010.

Overall, the nearly 30 accountable care organizations that served Michigan saved Medicare a total of $277.7 million while averaging a 94 percent quality rating.

Four of the top ACOs are Affirmant Health Partners’ Federation ACO LLC, Portage, $33.5 million and a 96.5 percent quality rating; McLaren High Performance Network LLC, Auburn Hills, $17 million retained earnings with 93.35 percent quality rating; Beaumont ACO, Southfield, which earned $14.2 million and received a 92.2 percent quality rating; and the Physician Organization of Michigan ACO, Ann Arbor, $10.5 million with a 93.9 percent quality rating.

Affirmant Health
William Mayer
“What we have achieved over the last three years in the Federation ACO is nothing short of extraordinary,” said William Mayer, M.D., Affirmant’s president and CEO, in a statement. “Our success can be attributed to the collaboration and hard work of our physicians and local Chapters in organizing as a health care network and putting focus, structure and processes around clinical programs that improve the health of our patients and communities. I could not be more proud of what we have accomplished together.”

The Federation ACO is owned and managed by Affirmant Health Partners, a clinically integrated network of over 5,400 physicians across Michigan’s Lower Peninsula. Partners include Bronson Healthcare, Covenant HealthCare, Henry Ford Allegiance Health, Sparrow Health System and Spectrum Health Lakeland.

In three years of program participation, the Federation ACO has saved Medicare over $121.3 million, earned $58.6 million in shared savings, and received quality scores over 96 percent. Federation also saved patients $8.4 million in out-of-pocket costs by improving care coordination and reducing unnecessary care.

ACOs share in savings by meeting a quality performance standard and saving at a rate equal to or greater than a minimum assigned benchmark. Total earned shared savings are adjusted for quality performance.

Overall, 541 ACOs saved Medicare $1.2 billion last year, which is higher than 2018 when the program saved Medicare about $740 million. There were 11.2 million beneficiaries in the Medicare shared savings program last year compared with 10.1 million in 2018.

Of the 541 ACOs in the Medicare program in 2019, 205 participated for the first time in a revised program called Pathways to Success. Pathways, which includes Federation ACO and POM ACO, requires ACOs to take on “downside risk.” Under downside risk, ACOs are required to hit predetermined quality and cost savings targets in order for them to retain shared savings.

CMS overhauled the long-standing Medicare Shared Savings Program in December 2018 in response to concerns that the program wasn’t saving the agency money. The vast majority of ACOs operated in the upside-only risk tracks, which allows participants to share in savings simply if they are efficient.

ACO experts tell Crain’s the key to savings and quality improvement is straightforward: Increase access to physicians, coordinate care with hospitals and specialty doctors, and reduce unnecessary services outside of physician offices. Care at the right time and at the right place can lead to fewer visits to urgent care, emergency rooms and hospitalizations.

Founded in 2013, The Physician Organization of Michigan Accountable Care Organization, or POM ACO, is sponsored by the University of Michigan Health System. POM takes care of more than 40,000 Medicare beneficiaries with 4,500 doctors and other providers.

For the third straight year, POM earned back money, saving Medicare $54 million and retaining $10.5 million. In 2018, POM saved Medicare $43.1 million and retained $18.1 million in earnings.

Michigan Medicine
David Serlin
“We are proud to report significant savings in 2019, which continues our strong track record of saving CMS nearly $200 million of taxpayer’s dollars during the life of our ACO and sharing in those savings the last three years,” said David Serlin, M.D., POM ACO’s medical director, in a statement.

“This year our quality performance improved significantly as well to nearly 94 percent, demonstrating our focused commitment to providing our patients with the highest quality of care,” said Serlin, who also is an associate professor and associate chair for clinical programs in the Department of Family Medicine at the University of Michigan Medical School.

In 2019, POM ACO members focused on the transition between hospitals and nursing homes or other skilled nursing facilities, and in the number of days spent in both types of facilities. By partnering with the facilities where its participating beneficiaries tend to receive care, POM ACO members continue to find opportunities to improve care and reduce costs.

McLaren’s ACO also ranked highly in Michigan and nationally with $37.1 million in total Medicare savings. The $17.1 million kept by McLaren will be split with its participating primary care and specialty physicians.

“We believe that value-based payments from value-based contracts like these will continue to be the way physicians, hospitals and health systems receive additional revenue going forward,” said Kevin Tompkins, senior vice president of marketing with 15-hospital McLaren, in an email.

Beaumont ACO recorded $27.8 million in total Medicare savings for 2019 and retained $14.2 million with a 92.2 percent quality rating.

“Strong partnerships between Beaumont Health and physicians has helped us transform health care by improving efficiency, reducing costs and improving care,” said Beaumont Health ACO Board Chairman Belal Abdallah, M.D., in a statement. “We always strive to provide the best care to patients in a cost-effective manner.”

The Beaumont ACO, which originally began operations in 2012 by Oakwood Healthcare, is a physician and health system partnership with more than 1,900 physician members. In 2014, Beaumont Health was formed in a merger with four-hospital Oakwood, three-hospital Beaumont Health system and Botsford Hospital.

Other ACOs in Michigan include: Reliance ACO LLC, Farmington ($3.2 million earnings with 92.2 percent quality); Trillium Health LLC, Traverse City ($2.98 million earnings, 96.3 percent quality); Prime Accountable Care LLC, Southfield ($1.5 million, 92.2 percent); Prime Healthcare ACO II LLC, Southfield ($2.7 million earnings, 92.2 percent quality).

UOP ACO, LLC, Dearborn ($2.17 million earnings, 92.2 percent quality); Northern Michigan Health Network, Traverse City ($1.9 million earnings, 99.4 percent quality); and PMC ACO, Flint ($1.6 million earnings, 92.2 percent quality).

Jay Greene: (313) 446-0325; Twitter: @jaybgreene