Health Expenditures and Quality Health Services: The Efficiency Analysis of Differential Risk Structures of Medicare Accountable Care Organizations (ACOs)

Charles C. Yang

North American Actuarial Journal, 2020, vol. 25, issue 1, 94-114

Abstract: Medicare Accountable Care Organizations (ACOs) represent the nation’s largest initiative of Medicare alternative payment models toward value and health outcomes. The Centers for Medicare & Medicaid Services (CMS) have tested various ACO models with differential risk structures, and have issued a final rule to accelerate the ACOs to assume greater financial risks. In response, this research investigates whether superiority exists among various ACO models and determines their potential cost reductions. The results indicate that in minimizing health expenditures given quality services, or maximizing quality services given health expenditures, one-sided ACOs are more efficient than two-sided ACOs, so it might not be advisable to mandate the transition of ACOs from one-sided to two-sided. This research also shows that Medicare ACOs should be able to reduce expenditures significantly through efficiency improvement, without switching to two-sided tracks. Another finding is that the benchmark expenditures for a significant number of Medicare ACOs are below the efficient expenditures and should be adjusted upward.

Date: 2020
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://hdl.handle.net/10.1080/10920277.2020.1793783 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:uaajxx:v:25:y:2020:i:1:p:94-114

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/uaaj20

DOI: 10.1080/10920277.2020.1793783

Access Statistics for this article

North American Actuarial Journal is currently edited by Kathryn Baker

More articles in North American Actuarial Journal from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().