Two-Sided Risk Models Drive Success for Medicare Shared Savings ACOs

Recent research by the Health Care Transformation Task Force (HCTTF) highlights the growing role and success of financial risk-bearing in the Medicare Shared Savings Program (SSP) for Accountable Care Organizations (ACOs). Among the 400 ACOs studied from 2022 to 2024, 60% participated in two-sided risk models, where they share both savings and losses with Medicare. These two-sided risk ACOs demonstrated higher gross shared savings and stronger quality outcomes compared to those in one-sided risk models, which only share savings. Historically, healthcare organizations have been reluctant to adopt two-sided risk due to significant financial exposure and the need for substantial investments in health IT, care redesign, and workforce infrastructure. However, federal initiatives, including adjustments made during the Pathways to Success redesign under the Trump administration, have aimed to increase two-sided risk participation to advance value-based care objectives. The HCTTF brief underscores that two-sided risk incentivizes ACOs to enhance analytics infrastructure, optimize care pathways, and engage clinicians systematically, resulting in cost reductions and quality improvements such as fewer emergency visits, hospital admissions, and better chronic disease management. These operational investments contribute to greater organizational maturity necessary for sustained success in value-based care models. Additionally, the analysis reveals that longer tenure in the SSP correlates with improved and more stable performance. ACOs in later contract periods exhibit higher average savings and reduced outcome volatility compared to newer participants. This improvement is attributed to accumulated organizational learning and the establishment of repeatable cost-containment strategies. Despite substantial progress, the study advises that success in the SSP is not guaranteed and requires disciplined financial planning, infrastructure investment, and sustained execution. These insights are critical for shaping future ACO models amid ongoing industry shifts toward widespread adoption of accountable care relationships within Traditional Medicare, currently encompassing roughly 53% of beneficiaries. Given that models like the ACO Realizing Equity, Access, and Community Health (ACO REACH) are approaching sunset dates, the industry calls for clear CMS guidance to support continuity and evolution of value-based care frameworks. CMS continues refining ACO strategies to bolster sustainability and effectiveness, highlighting the dynamic policy environment governing Medicare value-based care participation.