Determinants of success in Shared Savings Programs: An analysis of ACO and market characteristics

September 2016
Ouayogode, M.H., Colla, C.H. and Lewis, V.A.

Medicare's Accountable Care Organization (ACO) programs introduced shared savings to traditional Medicare, which allow providers who reduce health care costs for their patients to retain a percentage of the savings they generate. Using financial performance data from CMS, Medicare claims, and the National Survey of ACOs, the researchers examined ACO and market factors associated with superior financial performance in Medicare ACO programs. They found that in the first year, performance is quite heterogeneous, yet organizational structure does not consistently predict performance. In addition, organizations with large financial benchmarks at baseline have greater opportunities to achieve savings. The researchers suggest that CMS should continute to encourage diversity in organizational structures for ACO participants, and provide alternative funding and risk bearing mechanisms to continue to allow a diverse group of organizations to participate.

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