CMS: ACOs save Medicare $1.2B under 'Pathways to Success' program

doctor using tablet in operating room
In a blog post published Monday in the journal Health Affairs, Centers for Medicare & Medicaid Services Administrator Seema Verma credited savings seen under the Medicare Shared Savings Program to rules that shortened the pathway for financial risk. (Zapp2photo/Shutterstock)

A federal program aimed at lowering Medicare costs by incentivizing providers to move from fee-for-service to value-based care models generated $1.2 billion in net savings to Medicare last year, the Centers for Medicare & Medicaid Services (CMS) announced Monday. 

In all, there were 541 participating accountable care organizations, or groups of healthcare providers that take on the risk of the quality, cost and experience of care for a population of patients with the ability to share in any realized savings from lowered health costs.

In a blog post published Monday in the journal Health Affairs, CMS Administrator Seema Verma credited savings seen under the Medicare Shared Savings Program to recent rules that shortened the pathway for financial risk.

RELATED: CMS: Number of ACOs taking on financial risk doubles in 'Pathways to Success' program

In 2018, the Trump administration finalized the overhaul, called "Pathways to Success," under which "low-revenue" or physician-led ACOs would have three years to remain in a one-sided risk model, reduced from six. All other new ACOs would have two years, and existing one-sided ACOs would have one year to take on additional financial risk.

"A critical feature of value-based care is organizations taking on downside financial risk and accountability for the cost and quality of care their patients receive," Verma wrote in Health Affairs.

It is the third consecutive year the program has achieved net program savings, she said. The ACOs that participated as part of the Pathways to Success program options showed net per-beneficiary savings of $169 compared to $106 per-beneficiary savings for ACOs participating in legacy tracks.  

“Low-revenue” ACOs generally performed better than “high-revenue” ACOs, or those led by hospitals that tend to provide both inpatient and outpatient services, Verma wrote. For instance, overall, low-revenue ACOs had net per-beneficiary savings of $201 compared to $80 per beneficiary for high-revenue ACOs. Under the Pathways to Success options, low-revenue ACOs had net per-beneficiary savings of $189 while high-revenue ACOs had net per-beneficiary savings of $155, she sad.

These results are additional evidence that physician-led practices can be successful in generating savings through value-based care, said Farzad Mostashari, M.D., CEO of Aledade, a company that helps physicians join and run ACOs, in a statement.

His company works with more than 340,000 Medicare beneficiaries and saved nearly $180 million in unnecessary healthcare spending last year, he said.

"Once again, physician-led ACOs out-performed hospital ACOs," Mostashari said. "What we need now is to help more practices participate in these models of care."