Central to the controversy about ACOs’ potential for Value-Based Care is whether they actually save enough money and reduce costs fast enough. Researchers and advocates have produced various independent studies of ACO savings, the most generous estimating $1.8 billion in cumulative savings over the first three years of the program, almost double CMS estimates. Many others, however, dismiss the small proportion of savings—at a few percentage points—relative to total Medicare spending.
The previous CMS administration was clearly dubious about the shared savings model. It favored payment models that put providers at financial risk to increase cost reduction incentives, even though that resulted in declining ACO numbers. ACOs are now on a “glide path” that leads to increasing levels of risk over time, changing the “win-win” approach that was the hallmark of initial ACO development. CMS also introduced payment models like Primary Care First (PCF) and Direct Contracting (DC) to fix payment levels for Medicare through capitation, which competed with ACOs for patients and providers.