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September 1, 2022

ACOs generate substantial savings 5 years in a row

Daily Briefing

    CMS on Tuesday announced that accountable care organizations (ACOs) participating in the Medicare Shared Savings Program (MSSP) saved $1.66 billion in 2021.

    Cheat sheet: What are shared savings programs?

    MSSP nets millions in savings for the 5th year in a row

    In 2021, around 58% of ACOs in the MSSP generated savings of $1.66 billion—or 0.2% of total Medicare spending. According to Modern Healthcare, this is the fifth consecutive year that the program has resulted in savings.

    Low-revenue ACOs generated $237 per capita net savings, while high-revenue ACOs generated $124 per capita net savings in 2021. In addition, ACOs that were mostly comprised of primary care providers created $281 per capita net savings, and ACOs that were fewer than 75% primary care physicians created $149 per capita.

    Although the savings were a decrease from the $1.9 billion in savings generated in 2020, Clif Gaus, president and CEO of the National Association of Accountable Care Organizations, said this decline was not significant.

    "This is almost the fourth year of no growth, yet we're at least holding our level here in savings despite all the disruptions from COVID," Gaus said. "I hope that hospitals that have really been impacted financially by COVID will still see a way to invest money in new accountable care organizations," he said.

    Overall, 99% of ACOs in the MSSP met quality standards that made them eligible for shared savings in 2023. In 2021, ACOs earned $1.96 billion in performance bonus payments, compared with $2.3 billion in 2020.

    "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," said CMS Administrator Chiquita Brooks-LaSure. "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 proposes changes to the MSSP

    In July, CMS proposed several changes to the MSSP to attract more providers, particularly those working in rural and other underserved communities. Currently, over 525,000 providers who care for more than 11 million Medicare beneficiaries are part of the MSSP, and CMS is aiming to have 100% of traditional Medicare beneficiaries be in an accountable care relationship by 2030.

    In its proposal, CMS said it plans to offer advanced shared savings payments to low-revenue ACOs. The agency would also provide increased flexibility to ACOs that assume performance-based risk and add a health equity adjustment to ACOs' quality performance category to reward organizations for excellent care in underserved communities.

    In addition, CMS wants to adjust ACO benchmarks to correct glitches that make it more difficult for organizations to earn shared savings. According to CMS projections, these proposed changes could result in $650 million in higher shared savings payments to ACOs.

    "We are encouraged and inspired by five consecutive years of savings and quality improvement," said Meena Seshamani, CMS deputy administrator and director of the Center for Medicare. "Learnings from the Shared Savings Program can and should be applied across the industry, driving higher quality care system-wide. CMS looks forward to continually improving the program, expanding the reach of participating ACOs and addressing critical health disparities across the country."

    "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," said Gaus. (Asser, HealthLeaders, 8/30; Goldman, Modern Healthcare, 8/30; CMS press release, 8/30)

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