Medicare ACOs lost $41 million to poor quality performance

Keeping people out of the hospital is a primary goal of Medicare accountable care. For the most financially successful ACOs, however, that proved difficult last year, even with money on the line.

That weak performance, policy experts say, raises questions about the accuracy of quality measures in the rapidly expanding program. Proponents of ACOs tout the measures as safeguards for patients from providers who may withhold necessary care to curb spending.

In August, Medicare announced awards for ACOs, including $273 million for 65 Medicare accountable care organizations in their second year under the Affordable Care Act program. The awards are based on how much money ACOs save for Medicare patients under their care. Most ACOs keep half of what they save. But starting in the second year, awards are also adjusted based on the quality of care. 

Medicare reduced the financial awards for 65 ACOs by $41 million based on quality performance, according to an analysis by the consulting firm Leavitt Partners. Medicare ties ACO financial performance to zero measures in year one; 19 measures in year two and all 33 measures in the final year.