CMS: ACOs saved Medicare $1.6B overall in 2021 as big changes on the horizon

Accountable care organizations saved Medicare $1.66 billion last year as value-based care providers brace for potential major changes to the program like new health equity measures.

The Centers for Medicare & Medicaid Services (CMS) announced Tuesday that 2021 was the fifth year in a row that ACOs generated overall savings for Medicare and met quality targets. The announcement comes roughly a month after the agency proposed several changes to entice smaller ACOs to enter the program and prevent an erosion of participation. 

“Accountable Care Organizations are a true Affordable Care Act (ACA) success story, and it is inspiring to see the results year after year,” said CMS Administrator Chiquita Brooks-LaSure in a statement.

CMS reported that 99% of all ACOs in the Medicare Shared Savings Program (MSSP) met quality standards, and approximately 58% earned shared savings for abiding by spending targets. An ACO agrees to take on a certain degree of financial risk and to meet spending and quality benchmarks.

The ACO gets a share of any savings if Medicare spending is below the benchmark and must repay the federal government if it spends too much. 

“The type of ACOs that saw more net savings tended to be low-revenue, meaning they were mainly made up of physicians, included a small hospital, or served rural areas,” according to a CMS release on the findings. 

A low-revenue ACO generated $237 in savings per capita while higher-revenue programs got $124 in net savings per capita. 

CMS also found that physician-led ACOs generated particularly high savings. ACOs that are comprised of 75% primary care physicians or more saw $281 in net savings compared with $149 in net savings for ACOs that had fewer physicians.

“These results underscore how important primary care is to the success of the Shared Savings Program and demonstrate how the program supports primary care providers,” CMS said.

CMS told Fierce Healthcare that ACOs overall generated $3.6 billion in gross savings for Medicare when not accounting for shared savings payments.

In 2020, ACOs generated $4.5 billion in gross savings for Medicare and nearly $2 billion after factoring in the shared savings payments. 

The additional savings were notable since ACOs were still facing the financial impact of the COVID-19 pandemic, advocates say. 

"ACOs were proactive in their outreach to high-risk patients to keep them healthy, quickly established telehealth and remote monitoring capabilities to continue to provide care, and effectively managed home visits and post-acute care to reduce COVID transmission," according to a statement from the National Association for ACOs.

CMS also listed the results of a health equity analysis that explored who was eligible for assignment to an ACO last year. 

The analysis showed that “lower-income individuals or members of racial or ethnic communities appeared to represent a disproportionately smaller share of the Medicare population assigned to ACOs,” the release said. 

Improving access to ACOs for underserved populations is one of the changes to the MSSP that CMS proposed in the Physician Fee Schedule released earlier this year

The agency is proposing new upfront investments to entice smaller providers that treat patients in rural and underserved communities to become ACOs. 

“CMS is also proposing that smaller ACOs have more time to transition to downside risk, and a health equity adjustment to an ACO’s quality performance score that would reward excellent care delivered to underserved communities,” the agency said. 

CMS wants to make changes to how benchmarks, which are the quality and spending targets ACOs have to meet, are calculated in order to maintain participation. ACO advocates have been worried that participation in MSSP has declined in recent years. 

"We need to get more physicians and patients into these payment models as quickly as possible," said Farzad Mostashari, CEO of Aledade, which helps organize primary care ACOs, in a statement. "The results prove that it will mean better care and lower costs across the healthcare system."