Shared Savings Program ACOs wary as CMS halts pay models

Accountable care organizations and healthcare providers are closely watching for changes to Medicare’s permanent value-based payment program as the Trump administration begins putting its stamp on Medicare policy.

Weeks into President Donald Trump's second term, stakeholders are assessing whether the Centers for Medicare and Medicaid Services is committed to the Medicare Shared Savings Program or if the agency will heed calls from conservatives to scrap or diminish the ACO initiative, which the Heritage Foundation's Project 2025 playbook for the administration says should be terminated.

Related: 'Go wild.' 60 days of healthcare under Trump

Concerns about the future of the Medicare Shared Savings Program intensified when CMS called an early end to four smaller Medicare payment models this month.

This action served as a reminder that the Medicare Shared Savings Program is vulnerable: “Repeal harmful health policies enacted under the Obama and Biden administrations such as the Medicare Shared Savings Program and Inflation Reduction Act,” Project 2025 says.

Although Trump has distanced himself from Project 2025, his administration has adopted many of its priorities since he returned to the White House two months ago. In addition, the president appointed Project 2025 co-author Russell Vought as director of the White House Office of Management and Budget, a position he also held during Trump's first term.

CMS and the Heritage Foundation declined to comment.

The Medicare Shared Savings Program is a voluntary payment model established under the Affordable Care Act of 2010. The program allows providers to form ACOs, which aim to improve quality and reduce spending. Around 480 ACOs and 656,000 providers participate, according to CMS.

Medicare Shared Savings Program ACOs saved $2.1 billion in 2023, the most recent year for which data are available, CMS announced in October. That's the greatest savings since the model debuted in 2012.

“It’s unprecedented in the 60-year history of Medicare that you have such a widespread program that's performing at this level,” said Sean Cavanaugh, chief policy officer for Aledade, which advises medical practices on ACOs. "The fact that it's been successful has led to really broad support both in the past three administrations and on the Hill.”

CMS has ways to achieve higher savings without disrupting what makes the Medicare Shared Savings Program attractive to providers, said Aisha Pittman, senior vice president of government affairs for the National Association of ACOs. For instance, the agency could improve interoperability quality reporting, tweak the financial benchmarks formula and alleviate administrative burden, she said.

Yet Medicare Shared Savings Program participants and their representatives are anxious that it may be at risk, or at least may be transformed into something significantly narrower. While the administration has said little about alternative payment models, conservatives contend these programs don't save enough money, Susan Dentzer, president and CEO of America’s Physician Groups, said in an interview.

Fully abolishing the Medicare Shared Savings Program would require an act of Congress because it's part of the ACA. But CMS has a lot of leeway within the statutory language, said Kinal Patel, a partner at the law and lobbying firm Foley & Lardner.

“You don't need a targeted or wholesale repeal of the Affordable Care Act to remove or terminate the Medicare Shared Savings Program,” Patel said. “CMS could just choose no longer to operate the program.”

The agency also could reduce the model's scope and discourage participation, Patel said, in contrast to efforts under President Joe Biden to enlarge it.

"My prediction is they'll step up the financial accountability for participants based on the assumption that those that are more likely to incur losses or lower savings will voluntarily drop out, and the remaining high-performing ACOs will save the trust fund much more money,” said Valinda Rutledge, executive vice president of advocacy and education for America’s Physician Groups.

If CMS decides to keep the Medicare Shared Savings Program in place with modest revisions, it may opt to nudge ACOs into accepting more risk, leaving the government poised to accumulate greater savings, Cavanaugh said. “In the past, the Trump administration has supported these 'total cost of care' models, but had been pushing for greater performance,” he said. “If the past is prologue, you might expect that.”

Participants were slow to join two-sided risk arrangements in the program’s early years. The first Trump administration concluded this constrained savings, so CMS reduced the time limit for one-sided risk arrangements in 2018. The prior year, only 9% of Medicare Shared Savings Program ACOs were in two-sided arrangements. By January 2024, about two-thirds were. More recent data are not available.

A downside to requiring or strongly encouraging two-sided risk arrangements is it could dissade participation, Dentzer said.

CMS could also scale back the Medicare Shared Savings Program through inaction, Dentzer said. Participants complain about a so-called ratchet effect, which raises the bar for ACOs that have generated savings in past years to reap future benefits. Not addressing this would lead to shrinking participation, she said.

“Such moves could signal a willingness even to let [the Medicare Shared Savings Program] to ‘die on the vine’ from attrition — seeing ACOs drop out of the program over time, rather than fully repealing it,” Dentzer wrote in an email.