A regional health system enters into a Medicare Shared Savings Program (MSSP) Accountable Care Organization (ACO) agreement involving two-sided risk. The ACO has 20,000 attributed Medicare beneficiaries. The Centers for Medicare & Medicaid Services (CMS) establishes the ACO's annual benchmark expenditure at $12,000 per beneficiary.
To improve quality metrics and reduce unnecessary healthcare utilization, the health system implements a high-risk care coordination program led by specialized pharmacists and nurse practitioners. The total annual operational cost to run this new program is $2,500,000, which is funded directly by the health system out of its operating budget.
At the end of the performance year, the ACO's actual annual expenditure is calculated to be $11,700 per beneficiary.
The MSSP contract includes the following terms:
- Minimum Savings Rate (MSR): The ACO must generate savings of at least 1.5% of the total benchmark to be eligible for any shared savings. If the MSR is not met, the ACO receives no shared savings.
- Shared Savings Rate: If the MSR is met, the ACO retains 60% of the total savings generated below the benchmark.
- Quality Performance: The ACO achieved a quality score of 96%, fully qualifying them for the maximum 60% shared savings rate without any deductions.
Based on these results, what is the health system's net financial gain in dollars from this population health initiative for the performance year?
Answer: 1100000 dollars