Paying subsidies to offset the cost of making patient care more efficient could boost participation in the Medicare Shared Savings Plan and save Medicare up to 40%.

Those are the findings of a new data-driven model that examines why more providers aren’t benefiting from related accountable care organizations, which covered one-sixth of all Medicare enrollees in 2017. They found one major obstacle was the cost of investing in improvements such as information technology needed for care coordination or quality improvements meant to target readmission rates.

“To generate savings, a provider must invest to improve efficiency, which is a cost that is absorbed entirely by the provider,” reported researchers at the University of California-Berkeley. An alternate model that reimburses providers for those efforts — in addition to rewarding improved outcomes — would “produce a strictly higher expected payoff for both Medicare and provider.”

A complex mathematical model put the overall Medicare savings at 40%, whereas the savings in 2015 represented only a 0.6% decrease in overall spending.

Many skilled nursing operators have said they feel squeezed by the ACO approach, in which many networks have reduced costs by reducing skilled nursing referrals or spending. And even those who reduced spending might not have performed well enough to snag a bonus that  would have made their initial investment worthwhile, the researchers noted.

In 2017, CMS reported just one-third of its 392 shared savings participants qualified for a payment based on 2015 participation. That low success rate has made many think hard about continuing with voluntary participation.

“These challenges raise serious questions regarding the sustainability  of the MSPP in its current form,” the researchers wrote in support of their alternate, subsidy-based approach.

Other researchers have also pointed out that long-term success of the ACO model could require stronger financial incentives, such as including downside risk in contracts. 

One skilled nursing provider is counting on the program to boost its bottom line. In its earnings call last week, Genesis Healthcare said it was “cautiously optimistic” about receiving a payment for its 2018 ACO participation. 

Genesis has joined a new track with downside risk and the possibility of 75% gain sharing for 2019. CEO George Hager called the ACO network it created a “unique and critically important strategic asset.” 

“We believe the membership in our ACO can be significantly expanded not only within Genesis, but also more broadly throughout the SNF industry,” Hager said.