ACO Shared Savings Payment Model

If the ACO enhances or maintains quality and patient satisfaction, and there are savings relative to the predicted costs for the assigned patient population, then the ACO shares portion of those savings (commonly 50 percent according to some surveys and the Medicare Shared Savings Program final rule). This is stacked on top of the physician’s fee-for-service payments. To maximize incentivization, the savings pool should be divided in proportion to the level of contribution of each ACO participant. This aligns incentives of all ACO participants to keep patients as well as possible and ensure ill patients receive optimum care in a team environment across the care continuum. If primary care has especially high medical home management responsibility, this may be accompanied by the addition of a flat per-member/per-month payment.

Some of the savings pool distributions should be used to maintain the ACO infrastructure, but as much as possible should go to reward physicians, providers, and facilities for the extra time and attention devoted to patient management and technology investments. As mentioned, it should not go to pay affected physicians or hospitals for reduced revenues under fee-for-service for reductions in volume. A strength of this model is that it is easy to understand and transition to, since it builds upon the familiar fee-for-service system. That is also its weakness, since fee-for-service payment still rewards volume, not value. This shared savings model has been criticized as being “asymmetric” or “one-sided,” with no consequence if there are higher costs or no care improvement. Another problem is that there is by necessity a lag time to measure the “delta,” or the difference between the actual costs and the expected costs, so the ACO is uncertain whether there will be revenues. The delay saps the incentive to adhere to the ACO’s best practices and coordination.

The Texas Physician’s Accountable Care Guide, 2016

Last Updated On

February 13, 2017