Value-based care (VBC) arrangements between providers and payers are continuing to grow, both in terms of contract volume and the number of lives these contracts cover. Accountable care organizations (ACOs) can be a key vehicle for driving provider success in these VBC contract arrangements.
ACOs are integrated groups of healthcare providers who collaborate to efficiently manage patient care while improving healthcare quality and lowering the total cost of care. ACOs are responsible for the quality, cost, and overall care of an attributed population and are typically financially incentivized as they receive a share of any total-cost-of-care savings their attributed population generates.
Why should life sciences companies have strategies to engage with ACOs when it comes to pitching the value proposition for their products?
1. The number of lives attributed to VBC arrangements between providers and payers continues to grow.
According to the Healthcare Payment Learning and Action Network (HCPLAN), in 2023, 88.5 million lives across all payer types were attributed to providers in VBC arrangements. This included 16.5 million Medicaid lives (29.1% of Medicaid lives) and 14.1 million Medicare fee-for-service (FFS) lives (49.5% of all Medicare FFS lives).1 Just two years later, in January 2025, 53.4% of all Medicare FFS lives—about 14.8 million people—were attributed to a Medicare ACO model.2
With this increase in the total volume of insured lives attributed to providers in VBC arrangements, it is critical for life sciences companies to proactively engage with these provider groups.
2. A higher proportion of VBC arrangements include downside risk for providers.
HCPLAN projects the number of lives in VBC arrangements to grow. It also predicts an increase in the percentage of VBC healthcare payments moving to arrangements where both savings (upside risk) and losses (downside risk) are shared.
According to HCPLAN, in 2023, 21.1% of Medicaid, 21.6% of commercial, 43.0% of Medicare Advantage, and 33.7% of Medicare FFS payments flowed through risk arrangements that included both upside and downside risk.3 HCPLAN’s goal is to more than double these rates by 2030 and move 50% of Medicaid, 50% of commercial, 100% of Medicare Advantage, and 100% of Medicare FFS payments to downside risk arrangements.4
ACOs that take on downside risk are highly motivated to efficiently manage total cost of care and deliver cost savings; life sciences companies are positioned to contribute to an ACO’s efficient management of population costs through their chronic disease management and guideline-directed medical therapy (GDMT) value proposition. In particular, the use of evidence-based treatments, therapies, and medications recommended by clinical guidelines can improve outcomes for individuals with chronic diseases, potentially resulting in cost savings.
3. Medicare ACOs are a prime target for conversations about chronic disease management and GDMT.
More than 68% of Medicare FFS beneficiaries have two or more chronic conditions, and 36% of Medicare FFS beneficiaries have four or more chronic conditions.5 In addition, polypharmacy is common among the Medicare population. A 2024 study of drug patterns among adults age 65 and older found more than 40% of Medicare beneficiaries reported taking five or more prescription medications the previous month.6
GDMT can play a key role in an ACO’s population management strategy, as effective disease management may reduce the occurrence of adverse events, avoidable healthcare utilization, and disease progression, potentially leading to cost savings. ACO providers significantly influence the utilization and adherence to medical therapy for the lives under VBC arrangements. Life sciences companies are therefore well-positioned to help educate ACOs on how GDMT for conditions their products treat or prevent can help improve patient outcomes.
How can life sciences companies develop strategies to engage with ACOs when it comes to the value proposition for their products?
Key targets for life sciences company engagement are the 476 Medicare Shared Savings Program (MSSP) ACOs and the 122 Realizing Equity, Access, and Community Health (REACH) ACOs operating in 2025. These ACOs have 14.8 million attributed Medicare FFS lives.7 Publicly available outcomes reporting data8 can be leveraged to identify key data points and profile ACOs. Details from the publicly available data include each ACO’s history of shared savings/losses, target savings rate, risk track assignment, population demographics, and quality scores. In addition, each ACO receives monthly administrative claims data for all ACO attributed lives and this data can be mined to provide information on chronic disease characteristics and costs for an ACO population. These information sources can assist in developing talking points for discussing the value proposition of a particular product that is specific to a given ACO’s patient population and performance. In addition, ACOs’ claims data can provide prescriber and medical therapy utilization details to support conversations on improving GDMT.
With the growth in total volume of lives under ACO management and increased movement to enter VBC arrangements that include downside risk, ACOs are a key stakeholder with which life sciences companies can engage and discuss the value proposition for their products.
1 Healthcare Payment Learning and Action Network. (n.d.). 2024 APM measurement [Infographic]. Retrieved August 11, 2025, from https://hcp-lan.org/apm-measurement-effort/2024-apm/2024-infographic/.
2 Centers for Medicare and Medicaid Services. (January 15, 2025). CMS moves closer to accountable care goals with 2025 ACO initiatives. Retrieved August 11, 2025, from https://www.cms.gov/newsroom/fact-sheets/cms-moves-closer-accountable-care-goals-2025-aco-initiatives.
3 Healthcare Payment Learning and Action Network. (n.d.). 2024 APM measurement [Infographic]. Retrieved August 11, 2025, from https://hcp-lan.org/apm-measurement-effort/2024-apm/2024-infographic/.
4 Healthcare Payment Learning and Action Network. (n.d.). What is the Health Care Payment Learning & Action Network? Retrieved August 11, 2025, from https://hcp-lan.org/about-us/#Mission-Vision-Goals.
5 Lochner, K. A., & Cox, C. S. (2013). Prevalence of multiple chronic conditions among Medicare beneficiaries, United States, 2010. Preventing Chronic Disease, 10, Article 120137. Retrieved August 11, 2025, from https://www.cdc.gov/pcd/issues/2013/12_0137.htm#:~:text=overall%2c%2068.4%25%20of%20medicare%20beneficiaries,in%20general%2c%20had%20the%20lowest.
6 Harris, E. (July 26, 2024). Study: Polypharmacy nearly doubled in 20 years among older adults in US. JAMA, 332(7), 524. Retrieved August 11, 2025, from https://jamanetwork.com/journals/jama/article-abstract/2821721.
7 Centers for Medicare and Medicaid Services. (January 15, 2025). CMS moves closer to accountable care goals with 2025 ACO initiatives. Retrieved August 11, 2025, from https://www.cms.gov/newsroom/fact-sheets/cms-moves-closer-accountable-care-goals-2025-aco-initiatives.
8 Centers for Medicare and Medicaid Services. (October 29, 2024). Performance year financial and quality results. Retrieved August 11, 2025, from https://data.cms.gov/medicare-shared-savings-program/performance-year-financial-and-quality-results; download from https://www.cms.gov/priorities/innovation/files/aco-reach-py2022-fin-qual-results.xlsx.