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Medicare ACOs continue a streak of savings while planning expansion in rural areas

In 2021, the Medicare Shared Savings Program accrued $1.66 billion in savings for CMS, building more evidence for the value of accountable care.
By admin
Sep 6, 2022, 8:00 AM

The accountable care organizations (ACOs) in the Medicare Shared Savings Program (MSSP) are on a roll.

Marking the fifth consecutive year of overall savings in 2021 for the Medicare program, participating ACOs are racking up a respectable $1.66 billion net savings compared to benchmark spending targets.

Ninety-nine percent of ACOs reported and met the quality standard required to share in savings, CMS stated. Compared to non-ACO providers, participating groups had higher mean performance on key quality measures, including diabetes and blood pressure control, depression management, certain cancer screenings, the use of statin therapy, and smoking cessation interventions.

“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.”

However, just under 60 percent of ACOs actually received shared savings payments for their performance. Similar to prior years, these groups tended to be in the “low-revenue” category, primarily led by physician practices and smaller community hospitals, often in less densely populated regions of the country.

Related story: 5 best practices for engaging staff during clinical quality improvement initiatives

Low-revenue ACOs nearly doubled the savings of their larger counterparts – $237 in per capita savings compared to $124 for high-revenue ACOs. Groups composed mostly of primary care providers (75 percent primary care providers or more) outperformed all their peers, generating $281 in per capita savings.

With high performance skewing toward smaller ACOs with a heavy focus on primary care, CMS is proposing several important changes to the MSSP to help continue this positive trend. 

In the 2023 Physician Fee Schedule (PFS), CMS has laid out plans to expand the MSSP further with an even stronger focus on health equity and an eye toward bringing rural regions into the fold.

To encourage additional small and rural health providers to join the program, CMS is seeking to offer advances on shared savings payments. This will help resource-strapped clinics invest in practice transformation up front and reduce the burdens of entering the value-based care ecosystem for the first time.

Related story: Health equity takes center stage with new HEDIS quality measures

Providers serving higher proportions of dual-eligible beneficiaries and those operating in areas with high scores on standardized community deprivation indices will be eligible for larger advances.

This new suggestion, coupled with a gentler ramp to two-sided risk, changes to the benchmark calculations, and adjustments to the quality reporting process, are designed to make it easier and more attractive for providers to get started with value-based care.

The proposal comes at an opportune moment for small practices that are still struggling to recover from the impact of COVID-19 while staring down an unspecified period of economic uncertainty.

Inflation is taking a toll on both providers and their patients, with approximately half of Black and Latino Americans – as well as two-thirds of Native Americans – reporting serious difficulty with managing basic expenses, including paying for healthcare and medications, according to a recent poll from the Robert Wood Johnson Foundation.

Meanwhile, data from the American Hospital Association shows significant increases in operational and pharmaceutical costs, contributing to an overall 20 percent increase in the costs of providing acute care. 

Shared savings, ACOs could be lifeline for providers

Monetary advances on potential shared savings could be a critical lifeline for providers, particularly smaller primary care clinics in hard-hit rural areas.  These funds could support technology investments and staffing needs while closing the financial gap created by an increase in patients who cannot afford to seek routine care.

If the pitch is approved, vulnerable practices may be able to stay afloat during difficult times while simultaneously opening up opportunities for greater long-term sustainability in the value-based care environment.

This type of innovation will be crucial for growing the MSSP and providing high-quality care to Medicare beneficiaries across the nation, said officials.

“We are encouraged and inspired by five consecutive years of savings and quality improvement,” said Meena Seshamani, MD, PhD, 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.” 


Jennifer Bresnick is a journalist and freelance content creator with a decade of experience in the health IT industry.  Her work has focused on leveraging innovative technology tools to create value, improve health equity, and achieve the promises of the learning health system.

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