Jan. 30—About half of Medicare’s accountable care organizations (ACOs) saved the program money in their first year of operation, but only 25 percent of participants earned a share of those savings, the Centers for Medicare & Medicaid Services (CMS) reported Thursday.

In 2012, the first year of Medicare’s ACO program, its two components—the Medicare Shared Savings Program and the Pioneer ACO model—saved more than $380 million. Those savings included $128 million from about half of the 114 first-year participants exceeding their first-year targets. Another $126 million went to 29, or 25 percent, of the participating provider groups, which met cost-reduction benchmarks under the program.

Jonathan Blum, principle deputy administrator for CMS, said the lack of shared savings by most participating organizations stemmed from first-year “building year” challenges in creating programs that coordinate the care of Medicare beneficiaries across multiple care settings.

“We understand that in the first year of a program, organizations will have to invest and change and [will] have to build new systems of care, [employ] different staffing, so we’re in this for the long term,” Blum said in a call with reporters. “What I think is impressive is that so many organizations did save in its first year.”

The 23 provider organizations in the Pioneer ACO program saved $128 million. Those savings followed the migration of nine provider organizations initially participating in the Pioneer program to less-demanding ACO models. 

Nine Pioneer participants had “significantly lower spending growth relative to Medicare fee for service” while exceeding quality reporting requirements. The savings were far greater than those found in a previous CMS analysis, which used a different methodology.

Final performance year-one results—including quality outcomes—will be released later this year, according to CMS.   

“We see across the board that the organizations that have reported quality metrics are doing better than the underlying trend,” Blum said.

The agency aims to further help ACO participants improve their savings and quality through various initiatives to disseminate best practices undertaken by the better-performing providers. The program continues to grow rapidly, with about 100 new ACOs forming each year, Blum said. More than 360 organizations are participating in the Medicare ACOs, which include about 5.3 million Medicare beneficiaries, according to a CMS fact sheet.

Other Initiatives Grow

An earlier model CMS care coordination program, the Physician Group Practice Demonstration, allowed seven of its 10 participating organizations to earn $108 million in shared savings over five years, CMS reported. Additionally, participating organizations consistently demonstrated high-quality care on a broad range of chronic disease and preventive care measures.

Another 232 acute care hospitals, skilled nursing homes, physician group practices, long-term care hospitals, and home health agencies also entered into agreements to participate in the Bundled Payments for Care Improvement initiative. The program bundles payments for services that patients receive across a single episode of care, such as heart bypass surgery or a hip replacement, to encourage providers to work together to better coordinate care for patients.

CMS touted the new initiative as the largest test to-date of a bundled payment model by any payer.

Rich Daly is a senior writer/editor in HFMA’s Washington, D.C., office. Follow Rich on Twitter: @rdalyhealthcare.


Publication Date: Thursday, January 30, 2014