ACOs serve more Americans while increasing quality and savings

Accountable care organizations (ACOs) are serving more Medicare beneficiaries while generating larger savings to the Medicare Trust Funds and delivering higher quality care. In the third year of the Pioneer ACO program and Medicare Shared Savings Program (MSSP), both programs showed significant improvements, according to CMS’ 2014 quality and financial performance results. CMS Acting Administrator Andy Slavitt said, “These results show that accountable care organizations as a group are on the path towards transforming how care is provided. Many of these ACOs are demonstrating that they can deliver a higher level of coordinated care that leads to healthier people and smarter spending.”


ACOs are groups of physicians, facilities, and other health care professionals that agree to provide coordinated care to their patients to receive savings. ACOs use financial incentives to change behavior, such as paying more to physicians who coordinate care and use health information technologies. ACOs are judged on the care they provide, measured by various metrics—including how highly patients rate the doctor, how well clinicians communicate, whether the ACO screened for high blood pressure and tobacco use and cessation, and use of Electronic Health Records (EHRs). The Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) authorized two distinct ACO models.

The Pioneer ACO model, created by section 3021 of the ACA, is designed to support organizations with more experience in offering coordinated, patient-centered care. The program aims to test the payment arrangement of shared savings and shared losses, offering “higher levels of reward and risk than in the Shared Savings Program.” For the Pioneer program, ACOs agree to share their savings and losses with CMS, to a certain amount. Each Pioneer ACO had a minimum savings rate / minimum loss rate—if the gross savings / loss percentage was within that rate, the ACO neither received shared savings nor paid shared losses. If the ACO gained or lost more than their minimum rate, they either received a shared savings payment from CMS or owed CMS a shared loss payment, splitting the remaining amount.

Section 3022 of the ACA authorized the MSSP, which requires ACOs to meet 33 quality metrics specified in CMS implementing regulations. ACOs in the MSSP are not required to be subject to losses.

Third-year results

In 2014, the third performance year for both programs, Pioneer ACOs showed improvements in 28 of 33 quality measures and experienced average improvements of 3.6 percent across all quality measures. MSSP ACOs that reported quality measures in 2013 and 2014 improved on 27 of 33 quality measures.

When an ACO achieves high-quality care and effectively reduces spending above specified thresholds, it shares in the savings generated for Medicare. In 2014, 20 Pioneer and 333 Shared Savings Program ACOs generated more than $411 million in savings, which includes all ACOs’ savings and losses.

Other findings

In its analysis of the third-year results, CMS also discussed trends in the. For example, ACOs with more experience in the program tend to perform better over time, and the number of beneficiaries served by ACOs has consistently grown from year to year, and is likely to continue growing. Since the ACA was passed, more than 420 Medicare ACOs have been established, serving more than 7.8 million Americans.