CMS: ACOs saved $739M in 2018 as new program takes hold

Doctor and patient talking and discussing health treatment while sitting at the desk. Physician pointing into tablet pc.
The Centers for Medicare & Medicaid Services reported that accountable care organizations saved $739.4 million in 2018, as the ACO model goes through a makeover. (tablet andrei_r/GettyImages)

Accountable care organizations (ACOs) generated $739.4 million in net savings in 2018, according to the Centers for Medicare & Medicaid Services (CMS).

The data released Monday are based on savings spread across 548 ACOs. It shows greater savings among "downside risk" ACOs that were responsible for paying back the federal government for any cost increases compared to ACOs that did not take on such risk.

Overall, ACOs that took on downside risk for not meeting savings targets showed an average reduction in spending of $96 per beneficiary, compared to $68 for ACOs that didn’t take on such risk.

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CMS Administrator Seema Verma said the figures underscore the reason CMS instituted the new “Pathways to Success” program July 1. The program requires ACOs to take on financial risk at a faster rate than before.

“This trend is one of the reasons that the greater accountability for ACOs included in Pathways to Success, along with greater flexibility for them to innovate, will lead to better, more efficient care for Medicare beneficiaries,” Verma wrote in a blog post published Monday by the journal Health Affairs.

RELATED: Healthcare organizations ask CMS to expand Next Generation ACOs

Verma added that physician-led ACOs continued to perform better than ACOs led by hospital systems, which generate high revenue since they perform both inpatient and outpatient services. Physician-led ACOs had an average spending reduction of $180 per beneficiary compared with a $27 reduction for hospital ACOs.

The Trump administration has been pressing for changes to the Medicare Shared Savings Program (MSSP), which oversees ACOs.

Verma has criticized the program for letting an ACO remain in “one-sided” risk for too long. “One-sided” risk refers to when an ACO can get a share of any cost savings but does not have to pay the federal government anything for not meeting savings targets.

RELATED: ACOs should plan for shorter path to greater risk in CMS' overhauled MSSP

A new ACO must take on financial risk after three years of participation in “Pathways to Success.” In the old program, an ACO could wait six years before facing financial risk.

“Pathways to Success” offers ACOs two opportunities to sign up: July 1 or Jan. 1, 2020. But the ACO industry is worried about a decline in the number of organizations that decided to participate in the MSSP. In 2018, there were 561 ACOs, but as of July 1 that figure declined to 518, CMS said this summer.

But Verma in the blog post pointed to an increase in the number of ACOs taking on downside risk from 19% to 29%.

“CMS is continuing to closely monitor the Shared Savings Program,” she wrote. “We are excited to see growing interest.”

The National Association of ACOs questioned the need for the overhaul in response to the latest savings release. 

"Today’s results prove the Shared Savings Program was doing very well before last year’s changes by CMS,” said Clif Gaus, president of the association. “We should work to find ways to encourage ACO participation, which as evidenced by these results helps improve our health care system and the future of Medicare.”

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