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Related Experiment Video

Updated: Sep 9, 2025

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How Benchmark Changes Affect Participation in Accountable Care Organizations: Prospects for Voluntary Payment Models.

Alice J Chen1, J Michael McWilliams2

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American Journal of Health Economics
|September 2, 2025
PubMed
Summary

Accountable Care Organizations (ACOs) in the Medicare Shared Savings Program (MSSP) are more likely to drop out when their benchmarks are reduced. This highlights the critical role of benchmarks in ACO participation and payment model design.

Keywords:
H30I11I13I18Medicare Shared Savings Programaccountable care organizationbenchmarkdropoutparticipationselection

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Area of Science:

  • Health economics
  • Healthcare policy
  • Medical economics

Background:

  • Voluntary alternative payment models require provider participation for success.
  • The Medicare Shared Savings Program (MSSP) aims to reform provider payment.
  • Accountable Care Organizations (ACOs) are key participants in these models.

Purpose of the Study:

  • To analyze the impact of benchmark changes on ACO participation in the MSSP.
  • To understand the causal relationship between benchmark adjustments and ACO dropout rates.

Main Methods:

  • Utilized a natural experiment stemming from a 2017 rule change affecting ACO spending benchmarks.
  • Analyzed differential impacts of benchmark changes on ACO participation decisions.
  • Quantified the effect of benchmark decreases on ACO dropout likelihood.

Main Results:

  • ACOs experiencing effective benchmark decreases were 7 percentage points more likely to drop out.
  • Larger benchmark reductions significantly increased dropout rates by 11 percentage points.
  • ACOs with spending already exceeding benchmarks showed heightened sensitivity to benchmark reductions.

Conclusions:

  • Benchmarks significantly influence ACO participation in the MSSP.
  • Payment model designs must account for the impact of benchmark changes on participation.
  • Effective long-term incentives are needed to encourage sustained ACO participation and spending reduction.