Auyon Siddiq PhD Assistant Professor/INFORMS Member Decisions, Operations & Technology Management  UCLA Anderson School of Management

Analystics Can Redesign Medicare Shared Savings Program To Save Money Interview with:

Auyon Siddiq PhD Assistant Professor/INFORMS Member Decisions, Operations & Technology Management  UCLA Anderson School of Management

Dr. Siddiq

Auyon Siddiq PhD
Assistant Professor/INFORMS Member
Decisions, Operations & Technology Management
UCLA Anderson School of Management What is the background for this study? What are the main findings?

Response: The Medicare Shared Savings Program (MSSP) was created under the Patient Protection and Affordable Care Act to control escalating Medicare spending by incentivizing providers to deliver healthcare more efficiently. Medicare providers that enroll in the MSSP earn bonus payments for reducing spending to below a risk-adjusted financial benchmark that depends on the provider’s historical spending. To generate savings, a provider must invest to improve efficiency, which is a cost that is absorbed entirely by the provider under the current contract.

This has proven to be challenging for the MSSP, with a majority of participating providers unable to generate savings due to the associated costs. This study presents a predictive analytics approach to redesigning the MSSP contract, with the goal of better aligning incentives and improving financial outcomes from the MSSP. We build our model from data containing the financial performance of providers enrolled in the MSSP, which together accounted for 7 million beneficiaries and over $70 billion in Medicare spending. What are the main findings? Will the savings ultimately come from an overall decrease in provider reimbursement? 

Response: We estimate that adjusting the existing MSSP contract by adding a performance-based subsidy for provider investments can improve Medicare’s savings within MSSP by up to 40%, or about $60 million. Importantly, these savings can be achieved without leading to an overall decrease in provider reimbursements, relative to the existing contract, which would otherwise jeopardize provider participation in the MSSP. What should readers take away from your report?

Response: In addition to the Medicare Shared Savings Program, there are numerous incentive programs for Medicare providers that are currently in place. Using data analytics and optimization to re-design the contracts at the heart of these programs can go a long way in improving outcomes for Medicare, providers, and patients. What recommendations do you have for future research as a result of this work?

Response: Ideally, the Centers for Medicare and Medicaid Services (CMS) should consider subsidizing provider investments into efficiency improvements, and analyze whether these subsidies do in fact lead to improvements in savings, as predicted by our study.

No disclosures.


Data-Driven Incentive Design in the Medicare Shared Savings Program
Anil Aswani, Zuo-Jun Max Shen, and Auyon Siddiq
Operations Research 2019 67:4, 1002-1026

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Last Updated on August 8, 2019 by Marie Benz MD FAAD