The CMS Shared Savings Program: One of the Pillar of VBC Healthcare Transformation: By Huma Farman Khan

The landscape of healthcare delivery in the United States has witnessed a significant shift in recent years, moving from a fee-for-service model to one that prioritizes patient outcomes and cost efficiency. At the forefront of this transformation is the Centers for Medicare & Medicaid Services (CMS) Shared Savings Program, an initiative that embodies the principles of Value-Based Care (VBC) and aims to revolutionize the way healthcare is provided and reimbursed.

Let’s try to understand what exactly the CMS Shared Savings Program is !!

The CMS Shared Savings Program, established under the Affordable Care Act, is a groundbreaking effort to reshape healthcare delivery through collaboration and accountability. At its core, the program incentivizes healthcare providers to form accountable care organizations (ACOs), which are networks of doctors, hospitals, and other healthcare professionals that work together to improve patient care coordination, enhance quality, and lower costs.

ACOs operating within the program are tasked with achieving three crucial objectives:

Improving Quality: ACOs are required to meet specific quality measures that focus on patient-centered care, preventive services, care coordination, and patient engagement. By emphasizing these metrics, the program aligns with the core principles of Value-Based Care, which emphasizes the importance of holistic, patient-focused care delivery.

Reducing Costs: One of the central tenets of the Shared Savings Program is the reduction of unnecessary healthcare costs. ACOs are incentivized to implement strategies that lead to cost containment, such as avoiding unnecessary tests, reducing hospital readmissions, and promoting efficient care delivery. This mirrors the Value-Based Care approach of delivering high-quality care while eliminating wasteful spending.

Sharing Savings: A distinguishing feature of the program is the opportunity for ACOs to share in the financial savings they achieve. When an ACO successfully reduces healthcare costs below a predetermined benchmark while meeting quality requirements, they share in the resulting savings with CMS. This aligns with the overarching goal of Value-Based Care by incentivizing healthcare providers to prioritize efficient, patient-centered care delivery.

The fun part …..

“How the savings are shared ?” Let’s find out!

?In the CMS Shared Savings Program, the mechanism for sharing savings between Accountable Care Organizations (ACOs) and the Centers for Medicare & Medicaid Services (CMS) is defined by a pre-agreed upon sharing arrangement. This arrangement outlines how the achieved savings will be distributed between the ACO and CMS based on the ACO's performance in meeting certain quality and cost targets. The goal of this sharing mechanism is to provide financial incentives to ACOs for delivering high-quality care while reducing unnecessary healthcare costs.

Here's an overview of how the savings are typically shared in this model:

Sharing Arrangement: The specific sharing arrangement can vary depending on the model and track of the program that the ACO is participating in. Generally, there are two tracks: one-sided risk and two-sided risk. In the one-sided risk model, ACOs share only in the savings, while in the two-sided risk model, ACOs also share in the losses if costs exceed the benchmark. The percentage of savings shared between the ACO and CMS is determined by the program's rules and the ACO's agreement with CMS.

Benchmark Calculation: At the beginning of the performance period, a benchmark is established. This benchmark represents the expected healthcare costs for the attributed patient population. It's often based on historical spending data for that population.

Actual Costs Calculation: During the performance period, the ACO provides care to the attributed patients. The actual healthcare costs incurred during this period are calculated based on the services provided and their associated costs.

Cost Savings Calculation: The difference between the actual costs and the established benchmark represents the potential cost savings achieved by the ACO. If the actual costs are below the benchmark, this difference constitutes savings.

Quality Performance: In addition to cost savings, ACOs are required to meet certain quality performance metrics. These metrics include measures related to patient satisfaction, preventive care, care coordination, and more. The ACO's performance on these metrics plays a crucial role in determining the shared savings.

Shared Savings Calculation: The actual amount of shared savings that the ACO receives depends on a sliding scale based on its performance. A higher level of shared savings is typically awarded for better performance in meeting quality measures and achieving greater cost reduction.

Reinvestment and Distribution: The shared savings that ACOs receive can be used to reinvest in care coordination, technology, infrastructure, and other initiatives aimed at improving care delivery. Some ACOs also distribute a portion of the savings among their participating providers as incentives.

It's important to note that the sharing arrangement is part of a complex contractual relationship between the ACO and CMS. The specifics of this arrangement can vary based on the program's rules and the ACO's level of risk-bearing capacity. Some ACOs may choose to take on more financial risk in exchange for the potential for greater shared savings.

Overall, the sharing of savings in the CMS Shared Savings Program is designed to reward ACOs for delivering high-quality care while achieving cost efficiencies, aligning with the Value-Based Care principle of improving patient outcomes while controlling healthcare costs.

References:

McWilliams, J. M., Landon, B. E., Chernew, M. E., & Zaslavsky, A. M. (2015). Changes in patients' experiences in Medicare Accountable Care Organizations. New England Journal of Medicine, 374(18), 1749-1759. ?

CMS.gov. (2017). Pioneer Accountable Care Organization Model: General Fact Sheet. Retrieved from https://www.cms.gov/Newsroom/MediaReleaseDatabase/Fact-sheets/2017-Fact-Sheet-items/2017-01-11.html. ?