Accountable care is already generating savings for patients and Medicare. Expanding and strengthening these models could produce even greater savings across the health care system. Evidence from the Medicare Shared Savings Program (MSSP) and ACO REACH Model demonstrate that Medicare can generate savings while maintaining or improving quality.

The MSSP, established in 2012, rewards groups of clinicians and health care organizations, known as accountable care organizations (ACOs), for reducing Medicare spending while meeting established quality standards. A 2026 JAMA Health Forum study estimated that MSSP generated between $4.3 billion and $13.4 billion in net savings to traditional Medicare between 2012 and 2023. Under both the study’s primary and more conservative estimates, ACOs began generating net Medicare savings by the program’s second year, with savings generally increasing as organizations gained experience.¹ These results demonstrate that accountable care can provide a meaningful mechanism for controlling Medicare spending while supporting continued investment in physicians and primary care.

ACO REACH demonstrates that even greater financial accountability can generate more meaningful Medicare savings while still improving quality. In exchange for greater financial risk, ACO REACH allows the use of tools such as prospective and capitated payments to redesign care. In 2024, 115 ACO REACH organizations served approximately 2.5 million Medicare beneficiaries and generated $2.5 billion in gross savings and $988 million in net savings to Medicare, with 83% of participating ACOs earning net savings. A4H also highlights improvements in quality and care coordination, demonstrating that Medicare savings do not have to come at the expense of patient care.

The results among High Needs ACOs are particularly notable. These organizations serve some of Medicare’s most medically complex beneficiaries yet achieved a 14% net savings rate in 2024. These results demonstrate how accountable care can reduce unnecessary spending by investing in primary care, care coordination, chronic disease management, and other services that help prevent avoidable hospitalizations and other high-cost utilization, rather than relying on reductions to individual physician payments.²

Specialty-focused accountable care also demonstrates how financial accountability can change care delivery. The Comprehensive Kidney Care Contracting (CKCC) Model has improved care coordination, slowed kidney disease progression, expanded transplant access, and reduced avoidable hospitalizations. Early results include a 31% improvement in optimal dialysis starts, a 10% increase in home dialysis, and a 37% increase in preemptive transplant waitlisting relative to pre-model rates. These improvements can lower Medicare costs by reducing hospitalizations and emergency dialysis, increasing lower-cost home dialysis, and decreasing long-term reliance on dialysis through transplantation. An independent analysis, commissioned by A4H’s Kidney Care Coalition, found CMS’s 2026 CKCC changes could have generated approximately $90 million in Medicare savings in 2024.³

Congress should also consider H.R. 8129, the bipartisan legislation introduced by Reps. Claudia Tenney and Brad Schneider that would make this type of flexibility permanent by establishing a permanent, full-risk ACO program in traditional Medicare. The legislation would allow participating ACOs to move beyond traditional fee-for-service reimbursement and use capitation and other population-based payment arrangements, while requiring ACOs to share in 100% of savings and losses, subject to a benchmark discount.

Under full financial risk, the ACO would have considerably greater flexibility to invest in care coordination and alternative forms of care because the ACO would be responsible for the patient’s overall spending rather than maximizing the number of separate billable services. Full-risk ACOs guarantee savings back to the Medicare Trust Fund.⁴

That creates the right incentive for site-of-care decisions. If a medically complex patient can safely receive longitudinal primary care in the home rather than repeatedly visiting the emergency department, the patient, Medicare, and the ACO all benefit. If a procedure can appropriately occur in an out-patient surgery center rather than a more expensive hospital setting, the ACO has an incentive to facilitate that care.

ACOs can also help reform the healthcare system holistically as they are often the first to find and flag fraud, abuse, or waste within the healthcare system. The extraordinary growth in Medicare spending on skin substitutes provides a clear example of how ACOs detect fraud. Because ACOs are accountable for total spending, it has a direct incentive to notice when, for example, 150 patients suddenly generate tens of millions of dollars in wound-care claims. A physician who bills fee-for-service Medicare for those same 150 patients generally has no incentive to reduce costs, and in fact, can receive higher reimbursement from billing for expensive products and services.

Skin substitute reform demonstrates the significant savings possible when Medicare addresses fraud, waste, and misaligned payment incentives. Since CMS adopted reforms to better align skin substitute payments with appropriate use, the Congressional Budget Office estimates the policy will reduce Medicare spending by $245 billion over 10 years.⁵ The Department of Health and Human Services Office of Inspector General subsequently found that Medicare Part B skin-substitute spending had surged above $10 billion annually by the end of 2024, reinforcing the major fraud, waste, and abuse concerns raised by ACOs.⁶

This is precisely the type of payment distortion Congress should look to as it looks for offsets for H.R. 9693. It also demonstrates the value of accountable care as a program-integrity partner. ACOs do not replace traditional program-integrity enforcement, but they can provide CMS with an additional early-warning system when payment policy is driving inappropriate utilization.⁷

Expanding accountable care can generate greater Medicare savings by extending ACO incentives beyond primary care and into the areas where some of the highest and most variable spending occurs. Today, significant spending on post-acute and long-term care remains outside the reach of ACO incentives, including an estimated $200 billion associated with nursing facilities and long-term care. High Needs ACOs reduced skilled nursing facility days by 13.6% in 2024 relative to comparison groups. ACOs reported using dedicated staff to monitor admissions and discharges, coordinating with skilled nursing facilities, and building preferred relationships focused on quality and shorter lengths of stay.

Giving ACOs stronger tools to manage post-acute care, coordinate services for complex and high-need beneficiaries, identify low-value care, and better align patients with high-value providers could reduce unnecessary utilization and help produce larger, system-wide savings. At the same time, improving benchmarking, attribution, data timeliness, and risk adjustment would allow Medicare to more accurately recognize and reward the savings ACOs generate, strengthening incentives for accountable care to expand.⁸ These tools would allow accountable care organizations to manage a broader share of Medicare spending and direct patients toward high-value care across the continuum.

A4H supports Congress’s effort to establish a stable, predictable Medicare physician payment system and believes those reforms should be paired with policies that address the underlying drivers of Medicare spending. Accountable care offers Congress an opportunity to do both. Rather than financing physician payment updates through additional cuts to clinicians, Congress can expand models that reward physicians for preventing unnecessary utilization, coordinating care, identifying waste, fraud, and abuse, and directing patients toward high-value care.

Congress should continue strengthening the MSSP, preserve and build upon the lessons of ACO REACH, create pathways toward greater financial accountability such as a permanent, full-risk ACO program, and give ACOs the tools necessary to manage a broader share of Medicare spending. Doing so can help produce sustainable savings for the Medicare program while providing physicians with the resources and stability necessary to remain independent and continue caring for Medicare beneficiaries.

We appreciate the opportunity to provide feedback. If you have any questions about these comments or need additional information, please do not hesitate to contact Mara McDermott at, mmcdermott@accountableforhealth.org.

Sincerely,

Mara McDermott
CEO
Accountable for Health