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Restructuring Medicare Shared Savings Program can yield 40 percent savings in health costs

August 08, 2019 / Institute for Operations Research and the Manageme

More than a trillion dollars was spent on healthcare in the United States in 2018, with Medicare and Medicaid accounting for some 37 percent of those expenditures. With healthcare costs expected to continue to rise by roughly 5 percent per year, a continued debate in healthcare policy is how to reduce costs without compromising quality. As part of this effort, the Medicare Shared Savings Program was created to control escalating Medicare spending by giving healthcare providers incentives to deliver more efficient healthcare. New research published in the INFORMS journal Operations Research offers a new approach that could substantially change the healthcare spending paradigm by utilizing performance-based incentives to drive down spending.