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The Center for Medicare and Medicaid Innovation (known as the Innovation Center) accountable are organization (ACO) models, which pay providers based on outcomes rather than services provided, have demonstrated an ability to drive gross savings while maintaining or improving quality. However, net savings directly to taxpayers (via Medicare once payments to ACOs are included) have been mixed. The Innovation Center’s Global and Professional Direct Contracting Model launched in 2021, which was later renamed ACO REACH, demonstrated improvements in quality from 2021 through 2023. For example, in performance year 2023, REACH ACOs demonstrated quality improvements relative to a comparison group across several measures such as hospitalization rates, recommended diabetes care, and timely follow-up—while simultaneously reducing gross spending.
Despite these promising gross savings and quality results, ACOs still have a limited footprint in Original Medicare. Based on internal CMS research, only 20 percent of health care provider organizations with eligible beneficiaries participated in the Medicare Shared Savings Program or a CMS Innovation Center ACO as of 2022, and these tended to be health care providers experienced in accountable care.
Research has shown that health care providers that do not participate in ACOs exhibited higher per-beneficiary spending, underscoring the potential for heightened taxpayer savings and greater affordability for beneficiaries from an ACO model that would attract new health care providers. Bringing in health care providers new to ACOs should help those providers to lower costs and improve quality. The Innovation Center’s mission—aligning incentives and innovating to enable Americans to live healthier lives—remains more critical than ever.