Savings Reported By CMS Do Not Measure True ACO Savings

While participation in Medicare accountable care organizations (ACOs) continues to grow—9 million Medicare beneficiaries are currently attributed to Medicare Shared Savings Program (MSSP) ACOs alone, up 1.3 million since 2016—controversy swirls around their impact as analysts disagree about the success of the model. Some argue that ACOs have saved money (albeit a small amount) and that they could realize greater savings as the years go on. Others believe that there have been no savings at all from ACOs and that reform requires a new approach.

Some of this disagreement arises from the commentators’ differing conceptions of what the ACO would have spent were it not under the ACO contract. Indeed, one of the main difficulties in evaluating the success of the ACO project is choosing an appropriate counterfactual scenario against which to judge ACO performance. While we can observe actual spending for ACO beneficiaries, it is impossible to observe the counterfactual. Therefore, it’s very hard to know what would have been spent if ACOs did not exist. It is important to avoid using the Centers for Medicare and Medicaid Services’ (CMS’s) benchmarks to evaluate ACO savings because benchmarks are constructed with policy goals in mind. Benchmarks are not designed to reflect the counterfactual scenario in which the providers were not under the ACO contract.