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Avoiding unintended incentives in ACO payment models

Health Affairs, 2015-01, Vol.34 (1), p.143-149 [Peer Reviewed Journal]

Project HOPE—The People-to-People Health Foundation, Inc. ;Copyright The People to People Health Foundation, Inc., Project HOPE Jan 2015 ;ISSN: 0278-2715 ;EISSN: 1544-5208 ;EISSN: 2694-233X ;DOI: 10.1377/hlthaff.2014.0444 ;PMID: 25561655

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Title:
Avoiding unintended incentives in ACO payment models
Author: Douven, Rudy ; McGuire, Thomas G ; McWilliams, J Michael
Subjects: Accountable care organizations ; Accountable Care Organizations - economics ; Accountable Care Organizations - trends ; Benchmarking - economics ; Benchmarking - trends ; Beneficiaries ; Contracts ; Cost control ; Cost Control - economics ; Cost Control - trends ; Cost Savings - economics ; Cost Savings - trends ; Decision-making ; Delivery of Health Care - economics ; Delivery of Health Care - trends ; Fee-for-Service Plans - economics ; Fee-for-Service Plans - trends ; Forecasting ; Health care expenditures ; History ; Humans ; Incentives ; Medicare ; Medicare - economics ; Medicare - trends ; Patients ; Payment ; Payment systems ; Regulation ; Reimbursement, Incentive - economics ; Reimbursement, Incentive - trends ; Saving ; Studies ; United States
Is Part Of: Health Affairs, 2015-01, Vol.34 (1), p.143-149
Description: One goal of the Medicare Shared Savings Program for accountable care organizations (ACOs) is to reduce Medicare spending for ACOs' patients relative to the organizations' spending history. However, we found that current rules for setting ACO spending targets (or benchmarks) diminish ACOs' incentives to generate savings and may even encourage higher instead of lower Medicare spending. Spending in the three years before ACOs enter or renew a contract is weighted unequally in the benchmark calculation, with a high weight of 0.6 given to the year just before a new contract starts. Thus, ACOs have incentives to increase spending in that year to inflate their benchmark for future years and thereby make it easier to obtain shared savings from Medicare in the new contract period. We suggest strategies to improve incentives for ACOs, including changes to the weights used to determine benchmarks and new payment models that base an ACO's spending target not only on its own past performance but also on the performance of other ACOs or Medicare providers.
Publisher: United States: The People to People Health Foundation, Inc., Project HOPE
Language: English
Identifier: ISSN: 0278-2715
EISSN: 1544-5208
EISSN: 2694-233X
DOI: 10.1377/hlthaff.2014.0444
PMID: 25561655
Source: AUTh Library subscriptions: ProQuest Central
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Avoiding unintended incentives in ACO payment models

Project HOPE—The People-to-People Health Foundation, Inc. ;Copyright The People to People Health Foundation, Inc., Project HOPE Jan 2015 ;ISSN: 0278-2715 ;EISSN: 1544-5208 ;EISSN: 2694-233X ;DOI: 10.1377/hlthaff.2014.0444 ;PMID: 25561655

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