Creating A New ACO Model: Why Shared Savings Doesn’t Work & How A New Payment Model Can Improve Performance

Feature Article | by David Krueger & John Toussaint, Health Affairs Blog | March 31, 2016

Four years of nation-wide testing by The Centers for Medicare and Medicaid Services (CMS) has now proven that the current shared savings payment models do not work effectively for low-cost Accountable Care Organizations (ACOs). High-cost ACOs have more room to improve and therefore more opportunity for savings.

For those organizations that have already developed efficient, low-cost care delivery systems, Shared Savings is retrogressive. In this model, inefficiency is rewarded and lower-cost systems are penalized. In fact, we have lost about 40 percent of the members of the first cohort of ACOs—the Pioneer program—due . . .

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