ACOs Can Grow Value-Based Payment in Medicare, But Changes Needed

With Medicare spending growing at an unsustainable rate, the Medicare Payment Advisory Commission is advising Congress to accelerate the transition to value-based payment, using accountable care organizations (ACOs) and Medicare Advantage as vehicles. However, both models will need to be improved to realize potential savings, the Commission stated.

“While these programs may be capable of reducing spending relative to the FFS program, whether they actually produce substantial savings depends heavily on how they are structured,” the June 2020 report to Congress stated.

The fee-for-service system is no longer a viable option for Medicare. Spending on the federal healthcare program is slated to account for nearly five percent of gross domestic product within seven years, with must of the increase due to growth in payment rates versus growth in utilization, according to the Congressional Budget Office.

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