45% of ACOs cost more than estimated

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Almost half of all Medicare accountable care organizations are costing the government more than originally estimated, according to a new report from Kaiser Health News.

While some ACOs have proven successful in creating more efficient care, 45% of the groups' patients are costing more money than the government originally predicted based on historic patient costs, federal records show. Kaiser also reported that 196 ACOs saved money last year, while 157 cost more than expected.

The Centers for Medicare & Medicaid Services believes the ACO program is performing better than it actually is, the Kaiser report claims, due to using historical benchmarks and an alternative method for calculating savings. In August, CMS reported its ACOs had saved more than $411 million in 2014, due in part to some Pioneer ACOs' attention to post-acute care quality.

After paying bonuses to 97 ACOs that reported savings last year, the Medicare ACO program recorded a net loss of $3 million, Kaiser reported.

That loss could be attributed to the low number of ACOs accepting financial risk. Kaiser found only 7% of ACOs last year accepted a financial risk deal, where they would be eligible to earn larger bonuses but would also have to pay CMS if their patients cost more than estimated.

Reluctance by ACOs to accept financial risk has been so prevalent that CMS has allowed the groups six years to participate without penalties, instead of phasing out the no-risk option. CMS has also introduced incentives over the past year for ACOs members to assume greater risk, and potentially reap greater awards.