NAACOS pushes ACO REACH extension after $1.54B in savings
Net savings to ACOs were $948.4 million (3.4%) compared to model benchmarks, according to CMS.
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Accountable Care Organizations in the Centers for Medicare and Medicaid Services' ACO Reach program achieved $1.54 billion in gross savings and $694.6 million in net savings in 2023, CMS has announced.
The National Association of ACOs (NAACOS) has responded by advocating for an extension of the federal program.
Net savings to ACOs were $948.4 million (3.4%) compared to model benchmarks – an increase from the $371.5 million in net savings to CMS and the $484.1 million in net savings to ACOs in plan year (PY) 2022.
Savings increases from PY 2022 are due to performance improvements by model participants as they gained experience and growth, CMS said. Between 2022 and 2023, per beneficiary per month gross savings increased by 72% to $71.15.
Aisha Pittman, senior vice president of government affairs for NAACOS, congratulated ACO REACH participants for the exceptional performance.
"Through their commitment to improving patient care and driving efficiencies, 132 ACOs collectively generated $1.6 billion in gross savings and $695 million in net savings after accounting for shared savings and losses," said Pittman in a statement. "Overall, 73% of ACOs earned savings, demonstrating the model's effectiveness. ACOs were able to reinvest $948 million in savings to provide better patient care leading to improved quality scores between 2022 and 2023."
WHAT'S THE IMPACT?
According to CMS, improved performance by ACOs that started in PY 2021 drove the increase in net savings. The PY 2021 cohort included 64% of total ACO savings, despite PY 2022 being the largest model cohort.
PY 2021 cohort ACO net savings for PY 2023 were $575.7 million (a 6% net savings rate); PY 2022 cohort ACO net savings for PY 2023 were $216.5 million (1.8% net savings rate); and PY 2023 cohort ACO net savings for PY 2023 were $108.5 million (1.7% net savings rate).
Ninety-eight percent of PY 2023 CMS net savings were driven by the 3% discount applied to benchmarks of ACOs in the Global (100%) risk option – in other words, the majority of CMS' savings were earned by capturing the first 3% of all savings generated by ACOs in the Global risk option. And net of High Performance Pool Payouts, the quality withhold lowered CMS payouts by $54.1 million.
High Needs Population ACOs (13.3% net savings rate) and New Entrant ACOs (4.8%) achieved higher performance compared to Standard ACOs (2.8%), which CMS said was the result of more generous benchmarking policies, as well as a smaller number of participants within the former two ACO types.
"Despite the lack of opportunities for new ACOS to join, the ACO REACH Model has continued to grow in the number of participating clinicians, with more than 173,000 participating in 2024," said Pittman. "This growth, coupled with strong performance, highlights the value in ACO REACH empowering clinicians to deliver more innovative care for traditional Medicare patients. For example, ACO REACH allows providers to offer benefits to traditional Medicare beneficiaries not otherwise allowed like cost sharing waivers, chronic disease management rewards, and more flexible care in the home."
CMS said that, due to financial and quality results being calculated differently than the evaluation results, evaluation results for 2023 will have more conservative savings estimates. PY 2022 evaluation savings were significantly lower than savings relative to the benchmark, with $632.2 million in evaluation losses compared to $855.6 million in savings relative to the benchmark.
"NAACOS urges the Centers for Medicare and Medicaid Services to ensure that high-performing clinicians in the ACO REACH Model are provided a clear and predictable pathway forward," said Pittman. "Given the model's proven success, we strongly encourage CMS to extend ACO REACH beyond its current expiration date of 2026, while continuing to refine and develop new total cost of care models that will drive long-term improvements in the quality and affordability of care."
THE LARGER TREND
Changes announced to ACO REACH model for 2025 and 2026 will disincentivize providers from achieving meaningful improvements across the quintuple aim, Gary Jacobs, executive director at VillageMD's Center for Public Policy, said this year.
In July, the CMS Innovation Center announced several changes that Jacobs said are due to an evaluation done in 2022 of the former direct contracting model that ACO REACH replaced. The evaluation was the catalyst for these changes, he said, but didn't show anticipated savings.
CMMI models need to save Medicare Money, he said, but the changes make it less attractive to participate because the model is set up for ACOs to compete against themselves and their previous success – which means they need to achieve even greater results than the year before, a phenomenon known as the "ratchet effect."
"ACOs should be judged on whether they are delivering higher-quality and more cost-effective care than our existing system, not whether they outperform their previous success," Jacobs said.
Jeff Lagasse is editor of Healthcare Finance News.
Email: jlagasse@himss.org
Healthcare Finance News is a HIMSS Media publication.
