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ACOs' Strategies for Transitioning to Value-Based Care: Lessons From the Medicare Shared Savings Program


Medicare spending is expected to exceed $1.5 trillion by 2028, more than double the $708 billion in spending in 2017. To help control Medicare spending, while promoting high-quality healthcare, CMS has been implementing alternative payment models that reward providers for the quality and value of services. This is part of the transition away from fee-for-service to value-based care.

The Medicare Shared Savings Program is part of this transition and is one of the largest alternative payment models. In this program, healthcare providers voluntarily form Accountable Care Organizations (ACOs) to coordinate care to reduce spending and improve quality of care. Their strategies can inform not only current and future ACOs but also other alternative payment models.


We based this study on a purposive sample of 20 high-performing ACOs. These ACOs had reductions in Medicare spending and provided high-quality care. We conducted structured onsite or telephone interviews with key officials from each of these ACOs. We also analyzed supplemental documentation provided by these ACOs.


As part of the transition to value-based care, Medicare Shared Savings Program ACOs have developed a number of strategies to reduce Medicare spending and improve quality of care. This report describes the strategies that selected ACOs have found successful in reducing spending and improving quality of care. These strategies involve working to increase cost awareness in ACO physicians, engaging beneficiaries to improve their own health, and managing beneficiaries with costly or complex care needs to improve their health outcomes. Other strategies that ACOs found successful involve reducing avoidable hospitalizations, controlling costs and improving quality in skilled nursing and home healthcare, addressing behavioral health needs and social determinants of health, and using technology to increase information sharing among providers. ACOs also reported challenges in each of these areas and describe ways they overcame them.

CMS recently made changes to the Shared Savings Program. As CMS carries out this and other ACO programs and develops new alternative payment models, it should support the use of these strategies and other successful strategies that emerge. These strategies can apply not only to ACOs but also to other providers committed to transforming the healthcare system toward value.


On the basis of the experiences of the selected ACOs, we recommend that CMS take the following actions to support efforts to reduce unnecessary spending and improve quality of care for patients: (1) review the impact of programmatic changes on ACOs' ability to promote value-based care; (2) expand efforts to share information about strategies that reduce spending and improve quality among ACOs and more widely with the public; (3) adopt outcome-based measures and better align measures across programs; (4) assess and share information about ACOs' use of the skilled nursing facility 3-day rule waiver and apply these results when making changes to the Shared Savings Program or other programs; (5) identify and share information about strategies that integrate physical and behavioral health services and address social determinants of health; (6) identify and share information about strategies that encourage patients to share behavioral health data; and (7) prioritize ACO referrals of potential fraud, waste, and abuse. CMS concurred with all of our recommendations.