CMS Report Shows Some Medicare Cost Savings Through ACO Model


A report published last week by the U.S. Centers for Medicare and Medicaid Services (CMS) demonstrated, in the words of CMS, “encouraging results” in the reduction of healthcare costs to Medicare and improvement in the quality of care for over 5 million Medicare beneficiaries under the Affordable Care Act (ACA).

Under the ACA, the Department of Health and Human Services runs two different accountable care organization (ACO) programs. According to the report, in the larger of the two ACO programs, 54 of the 114 ACOs reached their goal of lower than expected expenditures. However, only 29 of the ACOs actually had savings large enough to share with their providers, representing just 25% of the 114 ACOs in the program. Although this particular ACO program only produced $128 million in “net savings,” the report states that the “preliminary data” showed that the Medicare ACOs generated $380 million in overall savings for the Medicare trust program when comparing years 2012 to 2013.

Unfortunately, CMS declined to provide any type of context with regards to the savings, such as which hospitals were successful, the amount of the investment made by the participants in the coordination of care, and/or how the savings compared to expectations. This type of information would be valuable to any provider that is considering forming or joining an ACO.

The data contained in the report is preliminary in nature, and represents only one year’s worth of data. It will be important to see if the trend continues overall, whether the same networks are able to maintain their savings from year to year, and whether additional detail will be provided regarding participant investment.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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