# Accountable Care Organization Efficiency on Entry and Shared Savings Bonuses

## TL;DR

Less efficient ACOs in the Medicare Shared Savings Program are more likely to earn bonuses than efficient ones, even after policy changes in 2017.

## Contribution

This study reveals that the Shared Savings Program disproportionately rewards inefficient ACOs despite updated benchmarking policies.

## Key findings

- Less efficient ACOs were more likely to earn bonuses before and after the 2017 regional benchmark adjustment.
- The most efficient ACOs saw improved odds of earning bonuses after the 2017 policy change, but the gap with less efficient ACOs did not close.
- The regional benchmark adjustment did not significantly narrow the disparity in bonus earnings between efficient and inefficient ACOs.

## Abstract

Are less efficient accountable care organizations (ACOs) in the Medicare Shared Savings Program more likely to earn bonuses compared with more efficient ones?

In this cross-sectional study of 402 ACOs between 2013 and 2020, less efficient ACOs on entry more commonly earned bonuses compared with more efficient ACOs. Following the introduction of the regional benchmark adjustment in 2017, there was no significant narrowing of this gap.

These findings suggest that the Shared Savings Program preferentially rewards less efficient ACOs compared with efficient ones, even after the introduction of the regional benchmark adjustment.

This cohort study of accountable care organizations in the Medicare Shared Savings Program investigates associations between high and low efficiency with earning a savings bonus.

Spending benchmarks in the Medicare Shared Savings Program previously only considered an accountable care organization’s (ACO) historical spending, potentially disadvantaging efficient organizations in favor of inefficient ones. To more sustainably reward efficient ACOs, benchmark calculation has evolved, such as the incorporation of average regional spending in 2017, but how benchmarking policy, and its changes, have affected the financial performance of ACOs across the efficiency spectrum remains unclear.

To measure the association between ACO efficiency on entry (ie, the ratio of observed to expected spending) with earning a shared savings bonus.

This cross-sectional study used a 20% national sample of Medicare claims to identify ACOs that participated in the Shared Savings Program for a minimum of 4 years between January 2013 and December 2020. ACOs were sorted in quartiles based on their observed to expected spending ratio in their first year of participants. Data analysis was conducted from July 2024 to May 2025.

Quartiles of ACO efficiency with a higher spending ratio denoting lower efficiency.

The primary outcome was receipt of a shared savings bonus in the second, third, and fourth agreement years. Multivariable logistic regression was used to estimate the association between ACO efficiency quartiles and earning a bonus and how the regional benchmark adjustment in 2017 affected this association across measured agreement years.

Across 402 ACOs, the median (IQR) spending ratio was 1.000 (0.993- 1.005). After adjustment, the most efficient ACOs (ie, lowest quartile of the spending ratio) had an increased probability of earning a bonus from 24.4% (95% CI, 15.3%-33.4%) to 45.2% (95% CI, 35.4%-55.0%) after the 2017 introduction of the regional benchmark adjustment. However, the least efficient ACOs (ie, top quartile of the spending ratio) were significantly more likely to earn bonuses prior to (43.8%; 95% CI, 33.7%-53.9%) and after (60.7%; 95% CI, 51.3%-70.1%) the benchmarking change, without evidence that this gap narrowed.

In this cross-sectional study, ACOs across the range of efficiency on entry had greater odds of earning bonuses after the introduction of the regional benchmark adjustment in 2017. However, less efficient ACOs had significantly greater odds of earning bonuses compared with more efficient ACOs, before and after the policy change.