ACO Shared Savings is Top Payer Partnership

Margaret Dick Tocknell, for HealthLeaders Media , June 6, 2013

The reason shared savings is popular is the costs involved in building the infrastructure necessary to transition to ACOs. The American Hospital Association places the cost at $1.7 million to $12 million to develop the infrastructure and resources needed, including information technology, care management programs, and patient-centered medical homes.

Damore noted that shared savings also allow time for ACO participants to gain experience in managing risk. "One-sided risk is a good way to gain experience for organizations that are new to managing risk."

On the commercial side, the most prevalent contracting vehicle is care management fees. These are generally lower risk because there are no shared savings or losses, Damore explained. Payers provide a set fee-per-member, per month (often $3 to $5) for more active care management and preventive services, such as disease management. However, payers are not obligated to share any savings that may accrue from those efforts.

"In early stages of accountable care, this may be preferable for commercial payers. It's a set and predictable amount of spending, versus shared savings, which would vary based on the success of the program," said Damore.

A Premier report [PDF] on its payer partnership program says risk aversion could be due to payers in the commercial market having bottom line obligations that may be less tolerant of losses than public payers such as Medicare.

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