Shared Savings Program ACOs Cut Costs Again, With 58% Earning Payouts

Over half of Shared Savings Program ACOs earned payments for their quality and cost performance in 2021, according to new data from CMS.

The federal agency reports that ACOs in the Medicare Shared Savings Program saved $1.66 billion last year while maintaining high quality scores. This marks the fifth consecutive year that the program has saved Medicare money, CMS notes.

“We are encouraged and inspired by five consecutive years of savings and quality improvement,”  Meena Seshamani, MD, PhD, CMS Deputy Administrator and Director of the Center for Medicare, said in the announcement.

“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,” Seshamani continued.

Nearly all participating ACOs—99 percent—reported and met the quality standard the government has established for Shared Savings Program ACOs to earn payouts. The ACOs also realized higher mean performance on quality measures compared to clinician groups not participating in the Shared Savings Program.

Reduced costs and high-quality performance translated to shared savings payments for the majority of Shared Savings Program ACOs. About 58 percent earned payments for their performance in 2021, with low-revenue ACOs netting more savings. Low-revenue ACOs are mainly made up of physicians, include small hospitals, or serve rural areas.

Low-revenue ACOs realized an average of $237 per capita in net savings, while high-revenue ACOs had $124 per capita in net savings.

Additionally, ACOs with more primary care clinicians saw higher net savings, with an average of $281 per capita. ACOs with less than 75 percent primary care clinicians had $149 per capita in net savings.

CMS Administrator Chiquita Brooks-LaSure called ACOs a “true Affordable Care Act success story” in light of the continued success of the Medicare Shared Savings Program.

“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,” Brooks-LaSure said in the announcement.

Previous administrations have questioned the success of the Medicare Shared Savings Program—the government’s largest ACO model with over 525,000 participating clinicians treating over 11 million Medicare beneficiaries.

The Trump Administration specifically criticized the ACO model, taking steps to reform the Shared Savings Program to increase its net savings. Under President Trump, CMS created the Pathways to Success, which put Shared Savings Program ACOs on a faster track to joining downside financial risk tracks.

The Biden Administration is seeking to give smaller ACOs more time to assume downside financial risk under the Shared Savings Program. Additionally, in the Calendar Year (CY) 2023 Physician Fee Schedule proposed rule, CMS proposed to give advance payments to certain new ACOs in rural and underserved communities.

Other changes the Biden Administration proposed in the rule include incorporating a health equity adjustment to an ACO’s quality performance score and further adjusting ACO benchmarks.

The administration intends for the changes, if finalized, to encourage more ACOs to join the Shared Savings Program and foster participation among current ACOs.

ACO participation in the Shared Savings Program has plateaued over the last couple of years following Pathways to Success implementation.