Key design elements of shared-savings payment arrangements

Shared savings is a payment strategy that offers incentives for providers to reduce health care spending for a defined patient population by offering them a percentage of net savings realized as a result of their efforts. The concept has attracted great interest, in part fueled by Affordable Care Act provisions that create accountable care organizations and by the movement among medical home pilots to make payment methodologies more performance-based. In this issue brief, the authors interviewed payer and provider organizations and state agencies involved in shared-savings arrangements about their diverse approaches, including the populations and services covered, the assignment of providers, the use of risk adjustment, and the way savings are calculated and distributed. The authors identified issues payers and providers must resolve going forward, including determining whether savings were achieved, equipping providers with necessary tools and technical advice, agreeing upon standard performance measures, and refining the model over time.