Medicare Shared Savings Program Saves Medicare More Than $1.8 Billion

The Centers for Medicare & Medicaid Services (CMS) announced that the Medicare Shared Savings Program saved money for Medicare while continuing to support high-quality care. Specifically, the program saved Medicare $1.8 billion in 2022 compared to spending targets for the year. This marks the sixth consecutive year the program has generated overall savings and high-quality performance results. This represents the second-highest annual savings accrued for Medicare since the program’s inception more than ten years ago.

“This program has delivered more than $1.8 billion in savings and delivered high-quality health care to millions of people,” said HHS Secretary Xavier Becerra. “Just last month, we proposed ways to further grow and expand this successful program, especially in rural and other underserved communities. The Biden-Harris Administration will continue to do everything we can to strengthen Medicare and ensure everyone can access high-quality, affordable health care.”

“The Medicare Shared Savings Program helps millions of people with Medicare experience coordinated health care while also reducing costs for the Medicare program,” said CMS Administrator Chiquita Brooks-LaSure. “CMS will continue to improve the program, and it is exciting to see that Accountable Care Organizations are continuing to be successful in delivering coordinated, high-quality, affordable, equitable, person-centered care.”

Shared Savings Program Accountable Care Organizations (ACOs) are groups of doctors, hospitals, and other health care providers who collaborate and provide coordinated, high-quality care to people with Medicare, focusing on delivering the right care at the right time while avoiding unnecessary services and medical errors. When an ACO succeeds in both delivering high-quality care and spending health care dollars more wisely, the ACO may be eligible to share in the savings it achieves for the Medicare program (also known as performance payments). This also drives lower health care costs for people with Medicare, who see lower out-of-pocket spending on avoidable health care utilization like emergency department visits because the ACO has better coordinated their care.

Over the past decade, the Shared Savings Program has grown into one of the largest value-based purchasing programs in the country. Value-based purchasing programs link provider payments to improved performance by health care providers. This form of payment holds health care providers accountable for both the cost and quality of care they provide, and it attempts to reduce inappropriate care and to identify and reward the best-performing health care providers. As of January 2023, Shared Savings Program ACOs include over 573,000 participating clinicians who provide care to almost 11 million people with Medicare. Based on the program’s success and opportunities to continually improve value for people with Medicare and the health care system, CMS has set a goal that 100 percent of people with Traditional Medicare will be part of an accountable care relationship by 2030.

“We are encouraged and inspired by six consecutive years of savings and high-quality care, with 2022 being one of the strongest years of performance to date,” said Meena Seshamani, MD, PhD, CMS Deputy Administrator and Director of the Center for Medicare. “The Shared Savings Program is Medicare’s permanent, flagship Accountable Care Program, and we look forward to continually improving and growing the program, expanding the reach of participating ACOs, and addressing critical health disparities across the country.”

ACOs had a higher average performance on quality measures they are required to report in order to share in savings compared to other similarly sized clinician groups not in the program. This includes statistically significant higher performance for quality measures related to diabetes and blood pressure control; breast cancer and colorectal cancer screening; tobacco screening and smoking cessation; and depression screening and follow-up. The higher quality performance by ACOs underscores how this type of coordinated, whole-person care can improve treatment of behavioral health conditions, helping to achieve the goals of the CMS’ Behavioral Health Strategy and improve cancer screening rates and prevention in line with the goals of the Cancer Moonshot.

Approximately 63% of participating ACOs earned payments for their performance in 2022. ACOs that earned more shared savings tended to be low revenue. Low-revenue ACOs are usually ACOs that are mainly made up of physicians and may include a small hospital or serve rural areas. With $228 per capita in net savings, low-revenue ACOs led high-revenue ACOs, who had $140 per capita net savings, and low-revenue ACOs comprised of 75% primary care clinicians or more saw $294 per capita in net savings, more than twice as much. These results underscore how important primary care is to the success of the Shared Savings Program and demonstrate how the program supports primary care providers. As articulated in a recently published article, the Innovation Center continues to explore testing models and features to support Shared Savings Program ACOs in increasing investment in primary care services.

Earlier this year, in the Calendar Year (CY) 2024 Physician Fee Schedule proposed rule, CMS proposed changes to the Medicare Shared Savings Program that would promote participation among health care providers and promote equity, especially in rural and underserved areas, helping to grow this successful program and improve access to coordinated, efficient, and high-quality care provided by ACOs for more people with Medicare. In particular, CMS proposes increasing the number of people receiving high-quality, accountable care by assigning more people who receive care from nurse practitioners, physician assistants, and clinical nurse specialists to ACOs. In addition, CMS proposes changes to the benchmark methodology to encourage participation by ACOs caring for medically complex, high-cost beneficiaries to join the program. These changes would further advance CMS’ overall value-based care strategy of growth, alignment, and equity, building on changes finalized in 2022, which included the establishment of advance investment payments for ACOs in rural and underserved communities, changes to the benchmark methodology, more time to transition to downside risk, and a health equity adjustment that rewards excellent care delivered to underserved communities. Public comments on the CY 2024 Physician Fee Schedule proposed rule are due by September 11, 2023.

View more information on the Medicare Shared Savings Program.

View more information on the proposals for the Medicare Shared Savings Program in the CY 2024 Physician Fee Schedule proposed rule, or reference the Shared Savings Program Fact Sheet.

View the 2022 Medicare Shared Savings Program Financial and Quality performance results.