Press Release

Embargoed Until Contact

September 26, 2012

Sue Ducat
Director of Communications
(301) 841-9962


From Health Affairs


Medicare Program Simulation Shows Limited Savings From Meeting Quality Targets


Bethesda, MD -- The Medicare Shared Savings Program, created under the Affordable Care Act, provides bonus payments to participating accountable care organizations (ACOs) that are successful in both lowering health costs in Medicare Parts A and B while meeting specified quality measures. A new study in Health Affairs analyzed the effect of the program on health and costs outcomes in patients with diabetes—the patient population most likely to show benefits and savings. The authors of the study used the Archimedes model to create a representative Medicare population and simulate the quality-improvement measures specified by the Centers for Medicare and Medicaid Services (CMS). They found that a ten-percentage-point improvement in performance on the measures resulted in Medicare cost savings only by up to about 1 percent.


A Simulation Shows Limited Savings From Meeting Quality Targets Under The Medicare Shared Savings Program


By David M. Eddy and Roshan Shah


Eddy and Shah are affiliated with Archimedes, in San Francisco, California; Eddy is its founder and chief medical officer emeritus and Shah is an associate scientist.


The study, which will also appear in the journal’s November issue, was partially supported by the Robert Wood Johnson Foundation.


The authors noted that CMS had projected that in the first three years of the Shared Savings Program, ACOs will receive estimated median shared savings of $800 million, spread among all participating organizations. “The savings needed to generate these payments will have to come from activities other than improvements in the clinical quality measures,” they concluded. “CMS will need to be very careful in setting the threshold and benchmark levels because they could profoundly affect the outcomes of the Shared Savings Program. Over time, CMS should consider an incentive based on the overall effect on health outcomes, not just on individual performance measures.”

About Health Affairs

Health Affairs is the leading journal at the intersection of health, health care, and policy. Published by Project HOPE, the peer-reviewed journal appears each month in print, with additional Web First papers published periodically and health policy briefs published twice monthly at You can also find the journal on Facebook and Twitter. Read daily perspectives on Health Affairs Blog. Download weekly Narrative Matters podcasts on iTunes.

The full text of each Health Affairs Web First paper is available free of charge to all Web-site visitors for a two-week period following posting, after which it switches to pay-per-view for nonsubscribers. Web First papers are supported in part by a grant from The Commonwealth Fund.