Medicare Shared Savings ACOs Save Money, Improve Quality
With Medicare spending projected to grow to $1.4 trillion by 2027, the federal government is looking for alternative payment models to slow spending growth, and a new report suggests those efforts are delivering.

With Medicare spending projected to grow to $1.4 trillion by 2027, the federal government is looking for alternative payment models to slow spending growth, and a new report suggests those efforts are delivering.

Accountable care organizations in Medicare’s Shared Savings Program reduced net spending by nearly $1 billion and improved quality metrics over the first three years of the program, a federal audit shows.

“While policy changes may be warranted, ACOs show promise in reducing spending and improving quality,” the Office of the Inspector General for the Department of Health and Human Services said in its review issued this week. “However, additional information about high-performing ACOs would inform the future direction of the Shared Savings Program as well as other alternative payment models.”

Medicare spending is projected to hit $1.4 trillion in 2027, which is more than double the $689 billion spent on the program in 2016. The Shared Savings Program is one of the largest alternative payment models, accounting for $168 billion in Medicare expenditures over its first three years, from 2013-2015.

OIG analyzed beneficiary and provider quality, spending and utilization data over the first three years of the program, which involved 428 ACOs and 9.7 million beneficiaries.

“During that time, most of these ACOs reduced Medicare spending compared to their benchmarks, achieving a net spending reduction of nearly $1 billion,” OIG said. “At the same time, ACOs generally improved the quality of care they provided, based on CMS data on quality measures.”

ACOs improved their performance on 82% of the individual quality measures, and outperformed fee-for-service providers on 81% of the quality measures. In addition, a subset of high-performing ACOs reduced spending by an average of $673 per beneficiary for key Medicare services during the review period.

That contrasts other Shared Savings Program ACOs and the national average for fee-for-service providers showed an increase in per beneficiary spending for key Medicare services.

The OIG report also found that: