Shared Savings

A form of financial incentive, where providers can share among themselves savings they achieve if the actual total cost of care they provided is lower than targeted total cost of care.

Shared savings incentive was included in the CMS patient centered medical home initiative (the Comprehensive Primary Care Initiative,) the Medicare Acute Care Episode demonstration, the Physician Group Practice (PGP) demonstration, and is now a focus of the Medicare Shared Savings Program which – like the PGP – uses the ACO delivery model. In some ACOs shared savings providers can share among themselves savings they achieve if the actual total cost of care they provided is lower than projected cost of care. In this way shared savings are different than gain–sharing arrangements that are a component of the CMS’s bundled payment initiative.