Accountable care organizations (ACOs) may help correct some of the “undesirable” financial incentives in Medicare's fee-for-service payment system, but the Centers for Medicare & Medicaid Services (CMS) should consider structuring the program so providers share financial risk with Medicare for the cost growth of their patients over an established target, according to the Medicare Payment Advisory Commission (MedPAC).
In a November 22 letter to CMS, MedPAC recommended a two-sided risk model in addition to a bonus-only model in a proposed rule establishing ACOs expected later this year from CMS. MedPAC observed, “the incentives in a bonus-only model for controlling spending are relatively weak and become weaker as the threshold is raised. This will likely be a particular concern to smaller ACOs because they may face higher thresholds. But even larger ACOs may find thresholds discouraging.”
Per MedPAC, ACO metrics could include population-based outcomes measures such as emergency room use, potentially preventable admission rates,
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