ACO Investment Model Produced Savings, But The Majority Of Participants Exited When Faced With Downside Risk.

Abstract

Medicare's Accountable Care Organization (ACO) Investment Model (AIM) provided up-front funding to forty-one small, rurally located ACOs to encourage their participation in the Medicare Shared Savings Program. We estimate net savings to Medicare of $381.5 million over three years, driven by utilization reductions in inpatient and other institutional care and by the absence of shared risk for potential increases in Medicare spending incurred by participants. These savings suggest that population-based payment models can enable providers to better meet the needs of rural populations through greater flexibility in care delivery. However, nearly two-thirds of AIM ACOs exited the Medicare Shared Savings Program when faced with the requirement to assume downside financial risk, starting in year four of participation. As the Centers for Medicare and Medicaid Services builds on AIM and rural hospital global payment models, our findings suggest that new payment models can support more efficient use of resources to meet the health care needs of rural populations. However, the findings also caution against the vigorous pursuit of savings as a primary goal of payment models in traditionally underserved communities.