Soon-to-expire ACO REACH generates more savings for Medicare
Dive Brief:
- The savings generated by a value-based care pilot in traditional Medicare continue to increase, even as it’s set to sunset at the end of this year.
- ACO REACH generated $2.5 billion in gross savings in 2024, with more than $988 million returning to the Medicare program, according to data released by the CMS on Thursday. That’s compared to Medicare savings of $70.4 million in 2021, $371.1 million in 2022 and $694.6 million in 2023.
- In 2024, 115 accountable care organizations covering 2.5 million seniors participated in ACO REACH. Of those, 96 ACOs earned net savings from the program, while 19 ACOs accrued losses.
Dive Insight:
Accountable care organizations, or ACOs, are groups of providers that assume responsibility — and in ACO REACH, financial risk — to care for a group of patients. ACO REACH, which replaced Medicare’s previous direct contracting arrangement in 2023, has struggled to get providers to sign up and stay in the program for fear of potential losses, despite tweaks by the CMS to try and incentivize more providers to participate.
Instead of renewing ACO REACH in advance of the program’s scheduled expiration at the end of 2026, the CMS elected to replace it with a new model called ACO LEAD that experts say addresses many provider concerns.
Still, ACO REACH’s efficacy continues to improve, even as the program is on its way out, according to the new data.
In 2024, the average quality score for ACOs, based on things like reducing patients’ hospital readmissions and providing timely follow-up care, increased from 79.42% in 2023 to 81.11%, the CMS said. ACOs are scored on a scale that can reach 100%.
ACOs in REACH also generated more savings for Medicare overall, though individual groups’ outcomes varied.
Three ACOs had a net savings rate north of 25%: ATLAS IPA, an ACO operating in New York; and HarmonyCares and Bloom Health Network, two ACOs operated by major in-home care providers in multiple states.
North Carolina ACO Physicians Healthcare Collaborative generated the highest net savings, taking home $183.2 million from its participation in ACO REACH in 2024, according to the CMS data. Its earnings outstripped those of the next-best performer, Rancho Health Management, which took in $50.3 million from ACO REACH.
Other ACOs did not do so well. Two of the program’s largest ACOs reported losses soaring into the tens of millions of dollars: An ACO maintained by healthcare behemoth CVS lost $69.5 million in 2024, while Vytalize Health, a risk-bearing provider enablement platform, had the steepest loss of $99.7 million that year.
That’s despite both organizations’ relatively low rate of losses: Vytalize had a net savings rate of -4.2%, and CVS a net savings rate of -2.1%. However, the ACOs’ larger populations — Vytalize has more than 160,000 beneficiaries, and CVS more than 210,000 — inflated the organizations’ losses overall.
Comparatively, North East Medical Services had a net savings rate of -14.4%, but lost just $9.7 million; while Arizona Best Care Network had a rate of -7.6%, but lost just $4.6 million. Both organizations had about 5,000 to 6,000 beneficiaries, outlining the steeper risk of participating in risk-based arrangements for larger operations.
But overall, ACO REACH’s performance in 2024 was strong, according to the National Association of ACOs, which advocates in support of providers participating in value-based arrangements.
The results “demonstrate the success and impact of the model’s innovative design and focus on high-needs populations. We look forward to seeing these features scale through the upcoming LEAD model,” NAACOS CEO Emily Brower said in a statement.
ACO LEAD is set to replace ACO REACH at the beginning of 2027. The model includes better benchmarks, prospective payments, a longer duration and other policies that regulators say will level the playing field between different types of providers and allow for more beneficiaries, including those needing more complex care, to participate.
Analysts and accountable care groups said ACO LEAD is a favorable development for companies in Medicare value-based care.
