How ACOs continue winning streak despite program headwinds
ACOs in the Medicare Shared Savings Program outdid themselves again, saving a record $6.5B in the 2024 performance year and truly demonstrating the value of the ACO model.
It was another record year for the Medicare Shared Savings Program. The 476 accountable care organizations, or ACOs, participating in the program in 2024 saved over $6.5 billion, delivering care to 10.3 million Medicare beneficiaries. What's more, the ACOs made significant improvements in key patient outcomes, particularly around prevention and chronic disease management.
The 2024 financial and quality results from the Shared Savings Program show continued, year-over-year savings to Medicare, explained Aisha Pittman, MPH, senior vice president of Government Affairs at the National Association of ACOs.
"We've seen seven or eight years of consecutive higher savings," she said. "That just proves that the program is working, that the ACO model does reduce costs and returns savings back to the government. That's one of the big highlights from this year's results."
Pittman broke down how ACOs in the Shared Savings Program have built on success and how CMS can improve the program to save even more.
Setting records, again
For the 2024 performance year, ACOs in the Shared Savings Program achieved the highest rates of shared savings since the program launched in 2012, according to data from CMS.
Three-quarters of ACOs participating in 2024 earned performance payments, totaling $4.1 billion. The ACOs also saved Medicare $2.4 billion relative to benchmarks, while serving 80% of the 10.3 million assigned beneficiaries.
Meanwhile, just 16 ACOs owed shared losses to CMS, totaling $20.3 million.
The ACO class of 2024 had the highest share of ACOs receiving performance payments and the highest amount of savings for ACOs and Medicare since the inception of the Shared Savings Program, CMS reported.
Beyond savings, though, ACOs also saw improved quality performance. CMS highlighted better performance in controlled blood pressure, hemoglobin A1c control and depression screening with a follow-up plan, compared to 2023.
Specifically, the mean percentage of beneficiaries with adequately controlled high blood pressure grew from 77.80% to 79.49% from the 2023 and 2024 performance years. Additionally, the mean percentage of beneficiaries with poor hemoglobin A1c control fell from 9.84% to 9.44%. These statistics represented ACOs reporting quality measures via the CMS Web Interface.
ACOs moving to reporting digital quality measures also saw improvements in these measures (69.63% to 73.65% for blood pressure control and 35.18% to 23.52% for poor hemoglobin A1c control). They also saw the mean percentage of patients screened for depression and for whom a follow-up plan was documented increase from 43.70% to 55.36%.
All these are markers of good health, CMS stated. And nearly all ACOs performed better compared to similar physician groups not participating in the Shared Savings Program.
For Pittman, though, it's not necessarily about the higher savings and quality.
"Yes, it's a record year, but each year ends up being a record year," she said. "This is a testament to the overarching program goals that drive better outcomes for patients and return savings to taxpayers and to the ACOs, who reinvest those shared savings into programs to help drive outcomes."
Driving savings, quality performance
Pittman asserted that savings and quality performance improvements can be attributed to the Shared Savings Program itself. The program returns savings to ACOs, which reinvest that money into their success strategies.
"That is where a lot of the shared savings go, into reinvesting in patient-focused programs focused on preventing and maintaining chronic diseases," she said.
This is a testament to the overarching program goals that drive better outcomes for patients and return savings to taxpayers and to the ACOs, who reinvest those shared savings into programs to help drive outcomes.
Aisha Pittman, MPH, SVP of Government Affair, NAACOS
Prevention and chronic disease management are staples of the ACO strategy for savings and quality performance. Pittman pointed to examples of ACOs developing food and nutrition programs or establishing food delivery programs for their patients using their shared savings. Many ACOs have also invested in transportation programs to ensure their patients have access to care when they need it.
"It sounds a bit basic, but it's what we know about the ACO model that works," Pittman said. "ACOs look at their patient populations and work with their communities directly, as well as their patients and caregivers, to design programs that are going to improve overall health. It's unique to each ACO, but there are some tried and true things that all ACOs do in the areas of prevention in chronic disease management."
However, ACOs couldn't get there without the shared savings payments. Resource and funding are major challenges of chronic disease management for healthcare providers. In particular, insufficient or misaligned payment models create financial barriers to delivering the coordinated care required for chronic disease management.
Savings despite ongoing challenges
Not only did ACOs in the Shared Savings Program achieve another record year, but they did so in the face of a major challenge with the program itself: its benchmarking strategy.
"Even though we saw really great performance and record shared savings, the shared savings were actually reduced by a benchmarking change that was put into place for 2024," Pittman said.
The 2024 performance year was the first time ACOs were subject to the Accountable Care Prospective Trend (ACPT), a new benchmarking approach that is a fixed, projected spending growth rate aimed at increasing predictability by separating the benchmark trend update from actual spending fluctuations. CMS said rulemaking that the ACPT "would incentivize both greater savings by ACOs and greater program participation."
However, the ACPT method generally reduced ACO benchmarks because the 2023-24 ACPT was well below the actual 2023-24 expenditure trend, according to the actuarial and consulting firm Milliman. They predicted that some ACOs would not see shared savings unless CMS removed the ACPT entirely or reduced its weight to zero.
CMS settled concerns by reducing the weight of the ACPT to a sixth from a third. However, Pittman said the ACPT "wildly underestimated what inflation was this year" while "arbitrarily lowering ACO benchmarks."
"Still having it in there, ACO savings were depleted a little bit," she continued. "So, even though we saw a strong performance, we know that ACOs could have had even stronger performance if this ACPT had been removed. And that's one of the things that we're still worried about going forward for 2025 and beyond."
A bright future for the Shared Savings Program
Benchmarking has been a persistent issue for the Shared Savings Program. Pittman described the problem as the "benchmark ratchet" because benchmarks based on historical spending mean ACOs have to compete with their own success in reducing spending.
"The success they had in the model ends up being harmful to their ultimate benchmark, making it harder to achieve shared savings," Pittman explained. "It reduces an ACO's ability to succeed in the program, earn shared savings and then reinvest those shared savings back into patient programs."
Now that the Shared Savings Program is over ten years old, the benchmark ratchet could significantly impact ACO participation as more organizations need to renew their contracts, Pittman explained.
"We can't continually reduce benchmarks over time. We have to think of long-term approaches to give ACOs a more stable benchmark," she said.
CMS is using a different approach in its latest ACO model, the Achieving Health Equity Through Accountable Design (AHEAD) Model. In AHEAD, the model will use state-based benchmarks that incorporate regional spending trends versus historical spending based on patient populations.
The AHEAD model will only go live in six states to start, but Pittman is optimistic that the benchmarking strategy signals a new direction for CMS when it comes to ACO benchmarking.
"Perhaps it could be something that is incorporated as an option for the Shared Savings Program in the future," she stated.
Potential programmatic changes and continued investments in patient care have ACOs excited for what lies ahead for the Shared Savings Program. ACOs in the program are learning how to build on success, Pittman said. Meanwhile, recent government-wide priorities around improving and accelerating the adoption of health IT are set to aid ACOs in coordinating care across different providers and facilities.
Another record year could be heading to the books for the Shared Savings Program, cementing its place as one of the most successful value-based care models.
Jacqueline LaPointe is a graduate of Brandeis University and King's College London. She has been writing about healthcare finance and revenue cycle management since 2016.
