The Merits of Administrative Benchmarks for Population-Based Payment Programs

AJMC November 23, 2021
Michael E. Chernew, PhD, Jermaine Heath, AB, J. Michael McWilliams, MD, PhD

The different approaches to setting benchmarks for population-based payment models (empirical, bidding based, and administratively set) have unique advantages and challenges.

Am J Manag Care. 2022;28(7):In Press

Takeaway Points

Understanding different approaches to setting benchmarks for population-based payment models can help policy makers design accountable care organization models that reduce spending, improve quality, and promote equity. Administratively set benchmarks, which tie benchmark trajectories to external indices (as opposed to historical spending), may address problems, such as ratchet effects, that are present when using other types of benchmarks.

Although Medicare has historically relied on fee-for-service (FFS) payment, population-based payment (PBP), which provides financial incentives to plans or providers to manage total cost of care, has grown in prominence over the past...

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