Congress eyes bigger incentives for Medicare ACO participants


New bipartisan legislation aims to boost participation in Medicare’s Accountable Care Organization (ACO) program by enabling healthcare providers to recoup a greater share of cost savings—and bear a smaller share of risk—resulting from their efforts.

The bill aims to reverse modifications President Donald Trump’s administration made the Medicare ACO program, which allowed providers to keep a smaller portion of cost savings and exposed them to a greater proportion of risk if savings weren’t achieved. Reps. Suzan DelBene (D-Wash.), Peter Welch (D-Vt.), Darin LaHood (R-Ill.) and Brad Wenstrup (R-Ohio) unveiled the legislation Wednesday.

“The pressure is on for Congress to address programs that prioritize value in our healthcare system,” DelBene said at a press briefing. “We should start with ACOs.”

ACOs are groups of doctors, hospitals and other providers who coordinate care for Medicare patients,. The Medicare ACO program aims to limit unnecessary care and prevent medical errors. Top-performing ACOs can receive bonuses for good outcomes. The Affordable Care Act authorized Medicare ACOs as part of its provisions designed to shift the healthcare system toward rewarding value instead of volume. Nearly all ACOs surpassed regular fee-for-service providers on 81% of quality measures, according to a 2017 HHS inspector general’s report.

The Trump administration decreased the savings ACOs could keep and required them to take on more risk sooner ,in 2019 likely leading to fewer providers providers taking part in the program.

There are 477 Medicare ACOs this year serving 10.7 million beneficiaries, a drop from 561 ACOs serving 11.2 million beneficiaries three years ago.

Under the House members’ proposal, new ACOs could receive between 50% and 60% of savings generated. The bill would allow new ACOs to operate for three years before they have to take on risk.

The Trump administration dropped the rates to 40%, contending the program wasn’t saving taxpayers enough money. The results suggest that CMS under then-Administrator Seema Verma may have been on the right track. After tightening the program’s requirements, Medicare ACOs saved a record-high $1.4 billion in net savings to Medicare from 541 ACOs in 2019. Spending on hospitalizations, emergency department visits and post-acute care went down across the Medicare ACO program, according to CMS.

Providers nevertheless objected to being asked to shoulder more risk for less reward.

“These reforms will ensure that value-based care models continue to be viable for physician and hospital participants,” the American Hospital Association, America’s Health Insurance Plans, the American Medical Association, and 11 other groups wrote in a statement.