What does the latest data from CMS mean for Medicare accountable care organizations?

The numbers coming out of the Centers for Medicare and Medicaid Services (CMS) tell an encouraging story about the prospects for Medicare Accountable Care Organizations and the Medicare Shared Savings Program.

According to a CMS report, 243 ACOs saved Medicare $877 million in an 18-month span that ended in 2013. While that is only less than one percent of the $362 billion spent on fee-for-service contracts in 2013, the savings provided suitable incentive for the Obama administration to push ambitious goals.

Currently, 20 percent of Medicare payments are delivered through alternative payment models that encourage value-based care. The administration wants that number to be 30 percent by 2015 and 50 percent by 2018.

Clearly, Medicare ACOs have room for improvement. Medicare has seen modest savings, but critics of the program have pointed to the number of organizations that have quit the Pioneer ACO model and the Medicare SSP and the loss of revenue for hospitals.

But the announcement that CMS will increase its alternative payment efforts shows that policymakers at CMS believe in value-based care. Congress does too. A widely supported bill last year proposed to replace the controversial strategic growth rate with quality of care reimbursement incentives. The bill passed the House by an overwhelming majority, but the Senate couldn’t agree on how to fund the bill.

In the Washington Post, a former HHS “Health IT Czar,” who has successfully launched three ACOs said it’s clear that the shift to fee-for-value will happen.

“It’s not so much about the specific goal, because that can and will change,” Farzad Mostashari said. “It’s about the sense of commitment that [hospitals] are perceiving.”

Judging by recent developments, providers should be noticing a strong commitment to value-based care.

To get more detail about federal support for value-based care, download a copy of Optum’s Trend Watch.

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