Lessons from the Camden Coalition of Healthcare Providers' First Medicaid Shared Savings Performance Evaluation

Accountable Care Organizations (ACOs) aim to reduce health care costs while improving patient outcomes. Camden Coalition of Healthcare Providers' (Camden Coalition) work already aligned with this aim before receiving state approval to operate a certified Medicaid ACO in New Jersey. Upon its formation, the Camden Coalition ACO partnered with UnitedHealthcare and, through state legislation, Rutgers Center for State Health Policy (CSHP) was established as its external evaluator. In evaluating the Camden Coalition ACO, Rutgers CSHP built on the Medicare Shared Savings model, but modified it based on the understanding that the Medicaid population differs from the Medicare population. Annual savings rate (ASR) was used to measure shared savings, and was calculated at the Medicaid product level and aggregated up to reflect a single ASR for the first performance year. The calculated performance yielded a range of shared savings from an ASR of 0.4% to 5.3%, depending on which dollar amount was used to create the outlier ceiling (limit at which a subset of members with expensive utilization patterns are excluded) and how the appropriate statewide trend factor (the expected percentage increase in Medicaid costs across the state) was chosen. In all scenarios, the ASR resulted in less cost savings than predicted. The unfavorable results may be caused by the fact that the evaluation was not calibrated to capture areas where Camden Coalition's ACO was likely to make its impact. Future ACO evaluations should be designed to better correlate with the patient populations and practice areas of the ACO.