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The Affordable Care Act in 2010 established an innovation center within CMS and facilitated the testing of various payment reform models focused on improving patient care and population health without increasing costs and lowering them where possible. As part of these efforts, CMS rolled out the Medicare Shared Savings Program (MSSP) in 2012, which allowed eligible providers to create accountable care organizations (ACOs) with the hope that increased coordinated care would result in savings that could be shared as long as quality standards were met.
As evidence emerged about how ACOs worked and their effectiveness compared with prior payment models in both cost and quality, CMS has tested and refined additional aspects of the ACO programs. The Pioneer ACO model included providers that largely already had the requisite infrastructure and care coordination practices in place, and they were able to show improvements in quality, but evidence on cost savings was mixed. CMS also initiated the broader MSSP in 2012, with less stringent risk-sharing requirements. To address concerns about the significant start-up costs for an ACO without that existing infrastructure, CMS designed a Medicare Advance Payment (AP) ACO model that provided an up-front fixed payment to participating ACOs and then a monthly payment thereafter based on the number of attributed beneficiaries. These advanced payments were to be recouped from shared savings in the first agreement period only. The Medicare ACO Investment Model (AIM) then built on the AP ACO model by allowing more ACOs (entering MSSP in 2012-2016) to defray the capital investments necessary to form and maintain an ACO. Empirical evidence to date on these advanced alternative payment models (APMs) is mixed, with the AP model demonstrating little effect on quality and an overall increase in total spending per beneficiary per month (PBPM), whereas the AIM has shown savings of $381.5 million, but the program includes only 14 (of 47) AIM ACOs still in the shared savings program. Nonetheless, since the initiation of the MSSP, ACO participation has grown to 517 ACOs with 11.2 million aligned beneficiaries nationwide in 2020.