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Achieving the Centers for Medicare and Medicaid Services’ (CMS’s) goal to bring every Medicare patient into a value-based care (VBC) arrangement by 2030 requires bold action. With six years left to achieve that goal (as of January 2024), only half of current Medicare beneficiaries are aligned with an accountable care organization (ACO) providing care within a VBC arrangement. This gap is large, but accelerated participation and reaching the 2030 goal remain possible. To close the gap, policy makers must apply the lessons learned from the real-world experience of models developed by the Center for Medicare and Medicaid Innovation (the Innovation Center), the Medicare Shared Savings Program (MSSP), and other CMS demonstrations.
ACOs participating in the MSSP and alternative payment models developed by the Innovation Center have proven that they can deliver high-quality care, improve the patient experience, and generate savings for Medicare. The Congressional Budget Office has found that physician-led ACOs and ACOs with a larger proportion of primary care providers, as opposed to specialists or clinicians in non-primary care settings, generate greater savings.
Both the Biden and Trump administrations have moved to expand VBC. During the Trump administration, the Innovation Center developed Direct Contracting Models allowing ACOs to choose between a 50 percent shared risk option and a full risk-sharing option. ACOs in the 50 percent risk-sharing option received a capitated payment for primary care services, while 100 percent risk-sharing ACOs could choose between a primary care capitated payment or a capitated payment for the total cost of covered services, including specialty care. Under the Biden administration, the Innovation Center expanded on the Direct Contracting Model with the ACO REACH model, creating an innovative payment structure for ACOs treating patients in underserved communities, raising requirements for provider leadership, and increasing transparency into ACO ownership and governance structure.
Drawing from our experience at an ACO participating in the Direct Contracting and ACO REACH Models, we analyze some of the major remaining barriers to widespread VBC adoption. Addressing these barriers will bring more providers and patients into VBC arrangements and accelerate movement toward the quadruple aim of better health outcomes, improved patient experience, provider well-being, and lower costs. We propose four pillars for the next evolution of VBC to close the gap: full risk-sharing options for ACOs, upfront capitated payments, financial predictability, and sustainable payment formulas.