NAACOS: ACOs Saved Medicare $3.5 Billion From 2013 to 2017

December 4, 2019
Laura Joszt, MA
Laura Joszt, MA

Laura is the editorial director of The American Journal of Managed Care® (AJMC®) and all its brands, including The American Journal of Accountable Care®, Evidence-Based Oncology™, and The Center for Biosimilars®. She has been working on AJMC® since 2014 and has been with AJMC®'s parent company, MJH Life Sciences, since 2011. She has an MA in business and economic reporting from New York University.

Accountable care organizations (ACOs) have saved Medicare a total of $3.53 billion from 2013 to 2017, or $755 million after shared savings were paid out, according to a new report from the National Association of ACOs (NAACOS).

Accountable care organizations (ACOs) have saved Medicare a total of $3.53 billion from 2013 to 2017, or $755 million after shared savings were paid out, according to a new report from the National Association of ACOs (NAACOS).

The report from Dobson | DaVanzo analyzed the Medicare Shared Savings Program (MSSP) in 2017 and updates 2 previous reports. In the past, CMS has reported more modest savings using different calculations. The new report detailed how it calculated savings compared with CMS’ benchmark approach.

“These results are undeniable,” said Clif Gaus, ScD, president and chief executive officer of NAACOS. “There hasn’t been another voluntary initiative in Medicare that has generated billions in savings over such a short period of time.”

Dobson | DaVanzo used a difference-in-differences estimator to calculate savings as the difference in average expenditures for beneficiaries assigned to ACOs before and after the program minus the difference in average expenditures for a group of beneficiaries not assigned to an ACO during the same time period to find the estimated reduction in spending per member per year for the ACO beneficiaries versus beneficiaries not in an ACO.

As a result, Dobson | DaVanzo’s report shows that ACOs in MSSP had net savings from 2013 to 2017 of $755 million compared with CMS estimates of —$70 million.

“Time and time again, ACOs have proven superior to Medicare’s other value-based care initiatives. CMS and Congress should look for ways to bolster ACO participation to further drive these savings,” Gaus said.

A paper published in Annals of Internal Medicine1 in June 2017 called the success of ACOs into question by highlighting that high-cost clinicians had a 30.4% chance of exiting MSSP, which suggested that improvements in quality and spending might have been a result of the “nonrandom exit of clinicians and their patient panels.”

At the time, NAACOS had pointed out that two-thirds of the ACOs in the Annals study had 1 or 2 years of experience. However, past research has shown that ACOs perform better and save more money as they gain more experience.

“This paper is not an indictment of the real savings ACOs have generated, but further evidence of how the model is unfolding,” NAACOS said in its statement at the time. “We know ACOs on the whole are saving Medicare money. This has been verified by multiple independent studies, including by MedPAC, researchers at Harvard, and NAACOS. These savings can translate into tens of billions of dollars over time when compounded annually and considering growth of the ACO program and more experience leads to greater savings.”

ACO leadership and makeup also have a big impact on performance. Research from September 2018 in The New England Journal of Medicine2 had shown that physician-group ACOs are more likely than hospital-integrated ACOs to be associated with savings in MSSP. In addition, physician-group ACOs had growing savings over 3 years.


1. Markovitz AA, Hollingsworth JM, Ayanian JZ, Norton EC, Yan PL, Ryan AM. Performance in the Medicare Shared Savings Program after accounting for nonrandom exit: an instrumental variable analysis. Ann Intern Med. 2019;171(1):27-36. doi:10.7326/M18-2539.

2. McWilliams JM, Hatfield LA, Landon BE, Hamed P, Chernew ME. Medicare spending after 3 years of the Medicare Shared Savings Program. N Engl J Med. 2018;379(12):1139-1149. doi: 10.1056/NEJMsa1803388.