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For ACOs to remain relevant and viable under risk payment models, they must step up now to generate more cost savings for Medicare patient care. Medicare’s budget cuts are once again under consideration as political pressure mounts to lower governmental spending. CMS is expanding risk through Medicare value-based payment models, such as the new ACO PC Flex model, which is designed to create per-patient reimbursement for small ACOs in trade for higher reimbursements and funding for infrastructure. Most newer CMS payment models are now incorporating per-patient payments designed to lower the total cost of care.
As the provider-driven vanguard in the Medicare Value-Based Care effort, ACOs’ total savings represent just slightly over 1 percent of $944.3 billion in total Medicare spending. Some ACOs have individually generated higher savings for their patients’ care, but others are at zero or in the red. ACOs collectively produced a considerable $10.5 billion in savings in the most recent reported year of 2022. But it is not enough to forestall budget cuts in the program as the fiscal situation tightens.
Why just one percent? The answer isn’t complicated: The way ACOs try to reduce costs is, in most cases, not sophisticated enough. And they have lacked the tools to save more.