Medicare Shared Savings Program generates over $1.6 billion in savings

Sept. 1, 2022

According to a release from the U.S. Department of Health and Human Services (HHS), the Centers for Medicare & Medicaid Services (CMS) announced that the Medicare Shared Savings Program, through its work with Accountable Care Organizations (ACOs) – groups of doctors, hospitals and other healthcare providers -- saved Medicare money while continuing to deliver high-quality care.

Specifically, the program saved Medicare $1.66 billion in 2021 compared to spending targets. This marks the fifth consecutive year the program has generated overall savings and high-quality performance results.

“This program has delivered more than $1.6 billion in savings and delivered high-quality healthcare to millions of people,” said HHS Secretary Xavier Becerra. “Just last month, we proposed ways to further grow and expand this successful program, especially in rural and underserved communities. The Biden-Harris Administration will continue to do everything we can to strengthen Medicare and ensure everyone can access high-quality, affordable healthcare.”

“The Medicare Shared Savings Program demonstrates how a coordinated care approach can improve quality and outcomes for people with Medicare while also reducing costs for the entire health system,” said CMS Administrator Chiquita Brooks-LaSure. “Accountable Care Organizations are a true Affordable Care Act success story, and it is inspiring to see the results year after year. The Biden-Harris Administration and CMS are committed to a healthcare system that delivers high-quality affordable, equitable, person-centered care – and a Medicare program that can deliver just that.”

Shared Savings Program ACOs are groups of doctors, hospitals, and other healthcare providers who collaborate to give coordinated high-quality care to people with Medicare, focusing on delivering the right care at the right time, while avoiding unnecessary services and medical errors. When an ACO succeeds in both delivering high-quality care and spending healthcare dollars more wisely, the ACO may be eligible to share in the savings it achieves for the Medicare program (also known as performance payments).

Over the past decade, the Shared Savings Program has grown to one of the largest value-based purchasing programs in the country. Value-based purchasing programs focus on the quality of care provided to people on Medicare, not just the quantity of services. As of January 2022, Shared Savings Programs include over 525,000 participating clinicians who provide care to more than 11 million people with Medicare. Based on the program’s success and opportunities to continually improve value for people with Medicare and the healthcare system, CMS has set a goal that 100 percent of people with Traditional Medicare will be part of an accountable care relationship by 2030.

“We are encouraged and inspired by five consecutive years of savings and quality improvement,” said Meena Seshamani, MD, PhD, CMS Deputy Administrator and Director of the Center for Medicare. “Learnings from the Shared Savings Program can and should be applied across the industry, driving higher quality care system-wide. CMS looks forward to continually improving the program, expanding the reach of participating ACOs and addressing critical health disparities across the country.”

Earlier this year, in the Calendar Year (CY) 2023 Physician Fee Schedule proposed rule, CMS proposed changes to the Medicare Shared Savings Program that would promote participation among healthcare providers, especially in rural and underserved areas, helping to grow this successful program to improve access to ACOs for more people with Medicare. In particular, CMS is proposing to incorporate advance payments to certain new ACOs in rural and underserved communities that could be used to address social needs, one of the first times Traditional Medicare payments would be permitted for such uses. CMS is also proposing that smaller ACOs have more time to transition to downside risk, and a health equity adjustment to an ACO’s quality performance score that would reward excellent care delivered to underserved communities. In addition, CMS is proposing benchmark adjustments to encourage more ACOs to join the program and to maintain participation amongst current ACOs. If finalized, these improvements and others would strengthen and grow the successful program, representing some of the most significant reforms since the program was established in 2011. Public comments on the CY 2023 Physician Fee Schedule are due by September 6, 2022.

Nearly all ACOs – 99% – reported and met the quality standard required to share in savings under the Shared Savings Program. ACOs had higher mean performance on quality measures compared to other clinician groups not in the program. This includes higher performance for quality measures related to diabetes and blood pressure control; breast cancer and colorectal cancer, and falls risk screening rates; flu vaccination; tobacco screening and smoking cessation; statin therapy for the treatment and prevention of cardiovascular disease. ACOs also had better performance on depression screening and depression remission rates, underscoring how this type of coordinated, whole-person care can improve treatment of behavioral health conditions in ACOs, in helping to achieve the goal of strengthening behavioral health quality in CMS’ Behavioral Health Strategy.

Approximately 58% of participating ACOs earned payments for their performance in 2021. The type of ACOs that saw more net savings tended to be low-revenue, meaning they were mainly made up of physicians, included a small hospital, or served rural areas. With $237 per capita in net savings, low-revenue ACOs lead high-revenue ACOs, who had $124 per capita net savings. Those ACOs comprised of 75% primary care clinicians or more, saw $281 per capita in net savings compared to $149 per capita in net savings for ACOs with fewer primary care clinicians. These results underscore how important primary care is to the success of the Shared Savings Program and demonstrate how the program supports primary care providers.

In addition, CMS is working to advance health equity by designing, implementing, and operationalizing policies and programs that support health for all people served by our programs. A health equity analysis of people eligible for assignment to ACOs in the 2021 performance year demonstrated that lower income individuals or members of racial or ethnic communities appeared to represent a disproportionately smaller share of the Medicare population assigned to ACOs. In line with the Biden-Harris administration’s commitment to advancing racial equity and support for underserved communities, CMS proposed updates in the CY 2023 Physician Fee Schedule proposed rule, which are designed to improve access to ACOs in underserved communities.

HHS release