Creating The Next Generation: The Payment Model We Need From Medicare

Health Affairs October 5, 2015
David Krueger and John Toussaint

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 mostly to the payment system design. Even the recently announced Next Generation ACO Model, with its welcome improvements, does not address a number of significant fundamental issues...

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