ACO REACH Model Generates $2.5B in Medicare Savings

The Accountable Care Organization Realizing Equity, Access and Community Health (ACO REACH) model generated $2.51 billion in gross savings and $988.3 million in net savings for Medicare in 2024, according to financial and quality results released by the Centers for Medicare & Medicaid Services. The model, which began in 2023 as a successor to the Global and Professional Direct Contracting Model, aims to improve quality of care and health outcomes for Original Medicare beneficiaries through the alignment of financial incentives, emphasis on patient choice, strong monitoring to ensure access to care, and an emphasis on care delivery.

Financial Performance and Savings Distribution

Gross savings represented 6.7% of adjusted financial benchmarks. After settling shared savings and losses with participating organizations, CMS retained net savings equal to 2.6% of benchmarks, up from $694.6 million in 2023. Accountable care organizations received $1.52 billion in net shared savings, or 4.2% of benchmarks. Of the 115 ACOs participating in 2024, 96, or 83%, earned shared savings, while 19 recorded losses. The organizations collectively cared for approximately 2.5 million Original Medicare beneficiaries.

Gross savings per beneficiary per month increased 24% year over year to $88.04. High needs ACOs recorded a 14% net shared-savings rate against their benchmarks, compared with 8.6% for new entrant ACOs and 4.2% for standard ACOs. CMS said 95% of its net savings resulted from the 3% discount applied to benchmarks for ACOs participating under the model’s global risk option.

Evaluation and Methodology

Quality performance also improved. The average total quality score increased from 79.42% in 2023 to 81.11% in 2024. Of the participating ACOs, 101 met requirements for continuous improvement or sustained exceptional performance, while 49 qualified for an additional payment from the model’s high performers pool.

CMS released the reconciliation results alongside the third independent evaluation of ACO REACH, which primarily examined the model’s performance in 2023 and reached a different conclusion about its effect on Medicare spending. The reconciliation calculates savings by comparing ACO spending with financial benchmarks established under the model. The evaluation used a difference-in-differences methodology that compared beneficiaries aligned with ACO REACH providers with similar beneficiaries living in the same healthcare markets.

The evaluation found that ACO REACH reduced gross Medicare spending by 1%, or $126 per beneficiary, in 2023. After including incentive payments to ACO REACH participants and payments made through other ACO models, however, net Medicare spending increased by an estimated 0.8%, or $102 per beneficiary. The report also found quality and utilization improvements, including reductions in emergency department visits, avoidable hospitalizations and post-acute care use. All three ACO types improved multiple quality measures, with larger improvements in 2023 than in previous performance years.

A separate CMS analysis providing preliminary evaluation findings for 2024 estimated that the model reduced gross Medicare spending by 2.2%, or $706.1 million. After incentive payments and payments to other ACOs were included, net spending increased by 0.2%, or $55.3 million. The net increase was smaller than in 2023. Standard and new entrant ACOs reduced net spending by an estimated 0.1%, although the result was not statistically significant. High needs ACOs reduced gross spending by 8.9%, but net spending increased by 9.1% after incentive payments were included.

The comparison groups used in the evaluation included beneficiaries whose providers participated in the Medicare Shared Savings Program and other alternative payment models. CMS acknowledged that as accountable care expands, fewer beneficiaries remain entirely outside such arrangements and those who do may be less comparable with beneficiaries in ACO REACH. “The current evaluation methodology was developed when accountable care represented a relatively small share of traditional Medicare,” Mara McDermott, CEO of Accountable for Health, an advocacy organization representing more than 60 providers, payers and healthcare innovators, said by statement.

McDermott also noted that the independent report principally reflects 2023 performance and does not capture subsequent changes to ACO REACH’s financial methodology. “Policymakers should place greater weight on the most current evidence available as they consider the future of accountable care,” she said. “Measuring today’s accountable care models using methodologies designed for a much smaller, earlier generation of value-based care risks overlooking the progress these models are making for patients and the Medicare program.”

The evaluation’s divergent findings highlight a challenge common to large-scale policy assessments. When a payment model captures a larger portion of a population, the statistical comparison groups shrink, making it difficult to isolate the model’s specific impact from broader market trends. This statistical noise can obscure whether savings are genuinely generated by the program’s structure or simply reflect the distribution of healthier patients to providers under the model.

Future Outlook

Today, more than half of traditional Medicare beneficiaries receive care from providers participating in accountable care arrangements.” CMS will replace ACO REACH with the Long-term Enhanced ACO Design Model in January 2027. The 10-year LEAD Model will use revised benchmarking and risk adjustment and is designed to attract smaller, independent and rural practices as well as organizations caring for medically complex populations.