Shared Savings
Shared savings is the payment an Accountable Care Organization (ACO) may be eligible to receive for achieving savings for the Medicare program while delivering high-quality care.
What is are Shared Savings?
Shared savings is a healthcare payment model that incentivizes healthcare providers, typically Accountable Care Organizations (ACOs), to reduce healthcare costs while maintaining or improving the quality of patient care. Under this model, if an ACO successfully delivers high-quality care and spends healthcare dollars more wisely than a predetermined benchmark, it becomes eligible to share in the savings generated for the Medicare program or other payers. These financial rewards are often referred to as performance payments.
The Shared Savings Program allows providers to continue receiving traditional Medicare fee-for-service payments, but offers the opportunity for additional payments if specific quality and savings requirements are met. This encourages ACOs to implement care coordination strategies, preventative care, and efficient resource utilization to lower overall healthcare expenditures without compromising patient outcomes. The goal is to shift from a volume-based payment system to one that rewards value and efficiency in healthcare delivery.
What is the difference between are Shared Savings and HMO?
Shared Savings is a payment model that incentivizes providers to reduce costs while maintaining quality, allowing them to share in savings. HMOs are healthcare plans with limited provider networks and often use capitated payments.
Shared Savings: Focuses on rewarding providers for cost reduction and quality improvement, often within fee-for-service. HMO: Typically a health insurance plan with a restricted network and usually uses capitated payments.
Shared Savings: Providers can receive traditional Medicare fee-for-service payments with opportunities for additional payments. HMO: Patients are often required to choose a primary care physician within the network to access specialized care.
Shared Savings: Encourages care coordination, preventative care, and efficient resource utilization to lower overall expenditures. HMO: Emphasizes managed care within a defined network to control costs.
What are examples of are Shared Savings?
An Accountable Care Organization (ACO) for Medicare patients sets a target for annual healthcare spending per patient. If the ACO provides high-quality care at a cost below this target, they share a portion of the saved money with Medicare.
A private insurance company partners with a network of hospitals and doctors. If this network collectively reduces patient readmissions and manages chronic conditions effectively, leading to lower overall costs, they receive a bonus payment from the insurer.
A group of primary care physicians implements new care coordination strategies, such as patient navigators and proactive outreach for preventative screenings. By doing so, they reduce emergency room visits and specialist referrals, and the payer rewards them with a percentage of the cost savings achieved.
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