Medicare ACOs Generated $1.7 Billion in Savings Last Year

The Medicare Shared Savings Program, the accountable care organization (ACO) model serving nearly 11 million seniors and the dominant value-based care program in Medicare, continued lowered the rate of Medicare spending while providing high-quality care, according to 2018 performance data released by CMS.

ACOs collectively saved Medicare $1.7 billion last year alone, and $739 million after accounting for shared savings bonuses and collecting shared loss payments. The results continue a growing trend of the Medicare ACO program saving money, CMS reports. Results for all 2018 Shared Savings Program ACOs, which compare the year’s spending to pre-set spending targets, are available in an online public use data file. 

“These numbers put to rest any notion that ACO savings are ‘modest’ and illustrate the strong performance of the leading Medicare alternative payment model,” says Clif Gaus, Sc.D., president and CEO of the National Association of ACOs (NAACOS). “Given time, we know ACOs save money and provide benefit for patients and taxpayers.

“Recent data from CMS indicate a potential drop in ACO participation. (These) results prove the Shared Savings Program was doing very well before last year’s changes by CMS,” Gaus says. “We should work to find ways to encourage ACO participation, which as evidenced by these results helps improve our healthcare system and the future of Medicare.”

Related: Physician Consolidation Leads To Higher Healthcare Costs

In 2018, 548 Shared Savings Program ACOs cared for 10.1 million beneficiaries. According to CMS data for that year, 66% of ACOs saved Medicare money, compared to CMS-set spending targets or benchmarks, and 37% saved enough money to earn shared savings bonuses. Both of these numbers are increases from previous years.

According to CMS Administrator Seema Verma, ACOs that received shared savings payments had decreases in inpatient, emergency room, and post-acute care spending and utilization. ACOs in both shared savings-only and risk-based models showed reductions in spending per beneficiary relative to their benchmarks.

Here are other key data points from CMS data:

• ACOs also had an average quality score of almost 93%;
• ACOs that joined the program in 2016 or 2017 improved their quality measure performance by an average of 27% in 2018;
• Those who earned shared savings retained an average of 48% of their generated savings; and
• ACOs in their second contract period (N=243) generally saved more than twice as much per beneficiary compared to ACOs in their initial contract period (N=305), showing savings increases over time.

Comparing ACO performance to CMS-set benchmarks isn’t even the best way to judge ACO performance. A better metric is “counterfactual” data that compares Medicare spending to what spending would be like in the absence of ACOs. Researchers at Harvard University, the Medicare Payment Advisory Commission and NAACOs have all done such work. All showed ACOs are lowering Medicare spending by 1% to 2%, which translates into tens of billions of dollars of reduced Medicare spending when compounded annually.