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For ACOs to remain relevant as leaders of Value-Based payment models, they must step up now to generate more cost savings for Medicare patient care. Budget cuts for Medicare are once again under discussion by conservatives as political pressure mounts to lower governmental spending. Meanwhile, CMS is expanding risk in Medicare value-based payment models, moving quickly away from Fee-for-Service reimbursement. The new ACO PC Flex model 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 patient’s 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. However, 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 both data and tools to generate deeper savings in Medicare patient spending.