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Medicare Shared Savings Program Saves More Than $1.6B Through ACOs

Analysis  |  By Jay Asser  
   August 30, 2022

Accountable Care Organizations (ACOs) are delivering high-quality care while spending less to earn performance payments.

The Medicare Shared Savings Program saved $1.66 billion in 2021 compared to spending targets, CMS announced today.

It marks the fifth consecutive year savings have been generated by the program, which worked with ACOs to incentivize the delivering of high-quality care.

ACOs are made up of various providers who come together to give value-based care to Medicare patients. When an ACO can both deliver high-quality care and spend wisely by avoiding unnecessary services, they can qualify to share in the savings they've created for the program.

As of January 2022, Shared Savings Programs include over 525,000 providers giving care to more than 11 million Medicare beneficiaries, according to CMS. The federal agency is aiming to have 100% of people with traditional Medicare in an accountable care relationship by 2023.

"The Medicare Shared Savings Program demonstrates how a coordinated care approach can improve quality and outcomes for people with Medicare while also reducing costs for the entire health system," CMS administrator Chiquita Brooks-LaSure said in a statement. "Accountable Care Organizations are a true Affordable Care Act success story, and it is inspiring to see the results year after year. The Biden-Harris Administration and CMS are committed to a health care system that delivers high-quality affordable, equitable, person-centered care – and a Medicare program that can deliver just that." 

CMS states that approximately 58% of participating ACOs earned payments for their performance in 2021, with low-revenue ACOs leading the way at $237 per capita in net savings, compared to $124 for high-revenue ACOs. The ACOs made up of at least 75% primary care clinicians saw $281 per capita in net savings, compared to $149 for ACOs with fewer primary providers, highlighting the importance of primary care to the success of the Shared Savings Program.

The program is also facing potential changes after CMS outlined its proposed 2023 Physician Fee Schedule, which features expanding access to ACOs.

The proposal includes incorporating advance payments to certain new ACOs in rural and underserved communities, allowing smaller ACOs to progress more slowly from low to high risk, benchmark adjustments to encourage more ACO participation, and more. Public comments on the Physician Fee Schedule are due by September 6.

The National Association of Accountable Care Organizations (NAACOS) has backed the potential changes to the program and lauded ACOs role in creating significant savings last year.

"Today's results again demonstrates that ACOs drive us towards a health care system that delivers affordable, equitable, high-quality, person-centered care" Clif Gaus, NAACOS president and CEO, said in a statement. "Eight years of continued strong performance with the positive proposed changes to the program included in the physician fee schedule sets the stage for significant growth in accountable care."

Jay Asser is the contributing editor for strategy at HealthLeaders. 

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