ACOs saved Medicare more than $700 million in 2016

Share this content:

Accountable care organizations participating in Medicare's Shared Savings and Pioneer models saved the program roughly $713 million last year — nearly double the amount of savings recorded in 2015.

Combined with two other ACO models, the Shared Savings and Pioneer programs generated a total of $836 million in savings for the Medicare program 2016, a Centers for Medicare & Medicaid Services representative told Bloomberg Law this week.

The organizations may be working out some growing pains that could lead to increased savings in the future, according to some observers. Just 220 networks participated in the Shared Savings program in 2013; it now boasts 480. While models vary, the idea behind ACOs is for both providers and Medicare to save money through care coordination and elimination of duplicate services.

“Hospitals and physicians are continuing to join these models as they realize healthcare will eventually be paid on value-based payments,” David Muhlestein, chief research officer at Leavitt Partners LLC, told Bloomberg. “Many ACOs are just starting to get used to the programs, therefore earning more savings.”

Experts also predict more ACOs moving to take on greater risk in the programs. Ninety-one percent of networks currently participate in the no-risk Track 1 option, although a survey from Leavitt Partners shows that 47% of ACOs are making plans to move to higher-risk tracks. In these tracks providers can potentially make more money, but bear more responsibility for financial losses as well.

“As risk-adverse as they are, ACOs are waking up and realizing they can make a lot more money,” Charles Oppenheim, of the law firm Hooper, Lundy & Bookman, told Bloomberg. “This is part of a general trend we see that organizations are gaining more experience with risk.”