Savings or Selection? Initial Spending Reductions in the Medicare Shared Savings Program and Considerations for Reform
Authors: McWILLIAMS J. MICHAEL , HATFIELD LAURA A. , LANDON BRUCE E. , CHERNEW MICHAEL E. 
Published: July 2020

Policy Points
Concerns have been raised about risk selection in the Medicare Shared Savings Program (MSSP). Specifically, turnover in accountable care organization (ACO) physicians and patient panels has led to concerns that ACOs may be earning shared‐savings bonuses by selecting lower‐risk patients or providers with lower‐risk panels.
We find no evidence that changes in ACO patient populations explain savings estimates from previous evaluations through 2015. We also find no evidence that ACOs systematically manipulated provider composition or billing to earn bonuses.
The modest savings and lack of risk selection in the original MSSP design suggest opportunities to build on early progress.
Recent program changes provide ACOs with more opportunity to select providers with lower‐risk patients. Understanding the effect of these changes will be important for guiding future payment policy.
ContextThe Medicare Shared Savings Program (MSSP) establishes incentives for participating accountable care organizations (ACOs) to lower spending for their attributed fee‐for‐service Medicare patients. Turnover in ACO physicians and patient panels has raised concerns that ACOs may be earning shared‐savings bonuses by selecting lower‐risk patients or providers with lower‐risk panels.MethodsWe conducted three sets of analyses of Medicare claims data. First, we estimated overall MSSP savings through 2015 using a difference‐in‐differences approach and methods that eliminated selection bias from ACO program exit or changes in the practices or physicians included in ACO contracts. We then checked for residual risk selection at the patient level. Second, we reestimated savings with methods that address undetected risk selection but could introduce bias from other sources. These included patient fixed effects, baseline or prospective assignment, and area‐level MSSP exposure to hold patient populations constant. Third, we tested for changes in provider composition or provider billing that may have contributed to bonuses, even if they were eliminated as sources of bias in the evaluation analyses.FindingsMSSP participation was associated with modest and increasing annual gross savings in the 2012‐2013 entry cohorts of ACOs that reached $139 to $302 per patient by 2015. Savings in the 2014 entry cohort were small and not statistically significant. Robustness checks revealed no evidence of residual risk selection. Alternative methods to address risk selection produced results that were substantively consistent with our primary analysis but varied somewhat and were more sensitive to adjustment for patient characteristics, suggesting the introduction of bias from within‐patient changes in time‐varying characteristics. We found no evidence of ACO manipulation of provider composition or billing to inflate savings. Finally, larger savings for physician group ACOs were robust to consideration of differential changes in organizational structure among non‐ACO providers (eg, from consolidation).ConclusionsParticipation in the original MSSP program was associated with modest savings and not with favorable risk selection. These findings suggest an opportunity to build on early progress. Understanding the effect of new opportunities and incentives for risk selection in the revamped MSSP will be important for guiding future program reforms.