Shared Savings

Shared savings incentive payments are designed to reward practices for providing high-quality care while managing the cost of that care effectively. The idea is simple enough: when a practice delivers good care at a lower cost than expected, some of the saving is returned to the practice rather than kept entirely by the payer.

How the saving is measured

Savings generated through the PCMH programme are shared based on each practice's cost of care relative to two references. The first is the practice's own historical cost of care, and the second is the historical statewide average for comparable care. Using both means a practice is judged against where it has been and against where its peers have been.

That dual benchmark is important. Comparing a practice only with its own history could reward a provider that was already efficient and had little room to improve, while comparing it only with a statewide average could be unfair to practices serving patients with greater needs. The two references together are intended to produce a more balanced view.

What the payment is meant to change

The payment rewards practices for providing efficient care and for managing the growth of cost over time. Rather than asking a practice simply to spend less in a single moment, the design looks at whether the practice is holding costs down while maintaining the quality of the care it provides.

Because the incentive is tied to quality as well as cost, a practice cannot reach a shared savings position by withholding care. The requirements that govern quality and coordination have to be satisfied for the savings to be shared, which keeps the incentive pointed at good care rather than at cost alone.

Who can qualify

Shared savings is one of the payments available to practices enrolled in the patient centered medical home programme, alongside the care coordination payments that support the ongoing work of coordinating care. Qualification depends on meeting the programme requirements set out in the PCMH manual and on the performance shown in the practice's reports.

Practices therefore need to understand both their measurement and their reporting. The quarterly reports show performance against the requirements, and the guides that accompany the reports explain how the figures are put together, so a practice can see what a shared savings result rests on.

How it fits with the rest of the programme

Shared savings sits within a broader set of changes to how care is organised. Practice support helps teams redesign the way they coordinate care, provider reports show how they are doing against the requirements, and shared savings returns part of the benefit when the changes produce results.

The interplay of the parts is deliberate. Support without measurement would leave practices guessing, measurement without support would be unreasonable, and a financial reward without quality requirements would invite the wrong behaviour. Together they form the incentive structure the programme was designed to create.

Shared savings and care coordination payments are designed to work together rather than separately. The care coordination payment supports the ongoing work of running a medical home, while the shared savings payment rewards the results that work produces when it is done well. A practice that treats them as a single arrangement, funding coordination in the short term and earning a share of the benefit when costs and quality improve, is using the programme the way it was intended to be used.

What determines a shared savings result

• The practice's cost of care compared with its own historical cost.
• The practice's cost of care compared with historical statewide averages.
• Performance against the programme requirements in the PCMH manual.
• Quality and coordination measures, which must be met for savings to be shared.
• The practice's published performance reports for the relevant period.
• Confirmation of current rules in the official programme materials.

Benchmarks used to judge cost of care

Shared savings amounts and the requirements behind them are set by the programme and can change between periods. Practices should rely on the current official guidance, the PCMH manual and their own published reports when assessing what a shared savings payment might be.