On September 16, the Centers for Medicare and Medicaid Services (CMS) announced that those accountable care organizations (ACOs) that have been in operation since 2012 have reduced Medicare spending by $817 million thus far. The hospitals, physicians and other participants in the ACOs have earned $445 million as their share of the savings. CMS issued a fact sheet detailing the findings.

The preliminary results announced by CMS included 220 ACOs participating in the Medicare Shared Savings Program (MSSP) and 23 Pioneer ACOs, affiliations of healthcare providers that opted to participate in an accelerated program. Both programs, created under the Affordable Care Act (ACA), reward providers that reduce the cost of care for Medicare beneficiaries below the cost in a benchmark year and meet certain performance standards for quality of care. All Pioneer ACOs that don’t meet these targets incur financial penalties, as do those MSSP participants that have agreed to assume risk in exchange for a larger share of potential savings. 

CMS found that, for both types of ACOs, quality of care generally improved but significant cost savings were not always achieved. Of the MSSP participants, 53 ACOs reduced spending by $652 million and earned performance payments of over $300 million as their share of the savings; 52 ACOs reduced costs but not by enough to qualify for a share of the savings; and one ACO overspent its target by $10 million and now must pay the government $4 million. Eleven of the 23 Pioneer ACOs earned $68 million in bonuses during the program’s second year, while three Pioneer ACOs incurred penalties for having increased their spending. 

More than 360 Medicare ACOs are now in operation, serving over 5.6 million Medicare beneficiaries. A new group of participants in the MSSP will be announced within a few months for the next round of the program which will begin in 2015. More information on ACOs may be found here.