According to the Centers for Medicare and Medicaid Services (CMS), one year into the Medicare Accountable Care Organization (ACO) initiative, a little less than half (54) of the 114 participating organizations have achieved savings and of those, just 29 saved enough money to receive “shared savings” bonuses. In addition, an in-depth savings analysis for the 29 participating Pioneer ACOs showed that nine achieved significant savings while also scoring high quality metrics.

CMS did not reveal key characteristics of the organizations that achieved savings, such as whether they were physician groups or hospitals. It also did not comment on why some may have achieved savings while others did not.

One theory is that many organizations joined the ACO initiatives before they had the necessary systems and culture in place to achieve savings through care coordination and best practices in use of health care resources. Indeed, David Muhlestein, Ph.D., J.D., MHA, Director of Research at Leavitt Partners noted as much on his Health Affairs blog. “A likely reason that some ACOs did not realize first year savings is that they spent much of the time establishing the processes that they believe will lead to lower costs,” he wrote.

The Medicare ACO initiative was in fact designed to allow organizations to figure out their own ACO strategy in the process of participating in the project. While participating organizations were eligible to share in savings from the beginning, those that did not achieve savings did not face financial penalties and have another two years to recoup their investment and learn from each other.

Overall, the Medicare ACO initiative has so far generated a total of $128 million in net savings for the Medicare Trust Funds, a result CMS called “within the range originally projected for the program’s first year.”

Although all but $2 million of that amount came from just 29 of the 114 participating organizations, in CMS’s press release, the agency reminded the public that much of the overall program’s net impact will phase-in over the next few years and that it has various support services in place to let ACOs not yet creating savings learn from those who are realizing savings.

Among the 23 Pioneer ACOs — the ACO model designed for more experienced organizations prepared to take on greater financial risk – there was a gross savings of $147 million in the first year. CMS noted that this was a much larger amount than what a previous analysis it had conducted had found.

“We are still early on in the program, but are encouraged by these results and are on track to meet our goals for participation in the Pioneer Accountable Care Organization Model,” stated Barbara Walters, DO, executive medical director for accountable care with the Dartmouth-Hitchcock ACO in New Hampshire, in the CMS press release.  “Our strategies of using patient outreach and education and regular follow up for targeted chronic disease programs are allowing us to anticipate patient needs before their health problems become worse. Involvement in the Pioneer Model is helping us provide better treatment for our patients across a wide-range of health challenges.”