Medicare’s Accountable Care Organization (ACO) models, which were created under the Affordable Care Act, are voluntary groups of hospitals and health care providers who work together to provide high quality, coordinated care while reducing health care costs. When an ACO meets or exceeds care quality standards and reduces spending, it will share the in the savings it achieves for Medicare overall.
There are two types of ACOs, differentiated by the amount of risk health care providers are willing to undertake- Medicare Shared Savings (lower-risk) and Pioneer(higher-risk). In 2012, 114 ACOs signed up for the former and 32 for the latter.
According to interim financial analysis released by CMS, ACOs achieved savings exceeding $380 million in their first year. Of the 32 original Pioneer ACOs, 9 left the program or switched to the lower-risk model. The 23 remaining Pioneer ACOs achieved gross savings of $147 million for Medicare. Of the 114 Medicare Shared Savings ACOs, 54 spent less than projected and 29 reduced costs enough to share in the savings for Medicare. Final results are expected later in the year, but the interim analysis indicates a strong start for CMS’ ACO initiatives and a promising alternative to the fee-for-service model.