Shared Savings Payment Model

Posted by mgsionline on October 1st, 2013

For several years now, the prime goal of the US healthcare industry has been to reduce the inflated medical costs. To attain this goal, several Provider payment models have been introduced, some of which have gained great popularity. The reason for the success of such payment models is that they not only improve healthcare quality, but also let Providers enjoy good incentives on achieving a particular target. Among the several physician billing payment models introduced by CMS, shared savings payment model has a completely different approach. Let’s take a look at the features of this Provider billing payment model:

Who are benefitted? The Patient Protection and Affordable Care Act of 2010 (ACA) introduced the Medicare Shared Savings Program to let Accountable Care Organizations (ACOs) share savings as well as risks under two categories. This model is widely used by public as well as private sectors.

Category 1:

  • A predetermined budget cost is set up for all those Healthcare Facilities and Providers participating in this physician billing payment model.
  • If the total cost of all patient care services rendered by a Provider is less than that of the budget cost, then the Provider receives a percentage of the difference between the actual cost and the budget cost.
  • In case, the actual costs exceed the budget cost, the Provider will not get any bonus incentive but at the same time does not suffer any penalty.
  • Usually, this category of the Shared Savings Payment Model is said to involve only upside risk.

Category 2: 

  • Similar to category 1, this category also sets up a predetermined budget cost, which will be used as the target by participating Healthcare Practices and Providers.
  • Here again, if the total cost of all patient care services provided falls short of the predetermined budget cost, then a percentage of the difference between these two costs will be awarded as a bonus to the concerned Healthcare Practice or Provider.
  • However, this provider billing payment model does not entertain those Healthcare Practices and Providers who exceed the budget cost.
  • In such scenario, participating Healthcare Practices and Providers will be subjected to a penalty of a percentage of the difference between the exceeded cost and predetermined budget cost.
  • This physician billing payment model involves both upside and downside risk. Therefore, the quality of patient care is sure to increase.

Many Healthcare Facilities and Providers consider participating in the Shared Savings Payment Model. However, implementing this model will require a lot of time and man power, which will hinder the normal medical claims billing work flow. Therefore, outsourcing a part of Medical Billing Tampa and collection process will be the ideal decision. 

About MGSI:

When it comes to unsurpassed medical billing and collection services, MGSI is at its best. This renowned medical billing company in Florida has more than 20 years of experience in the domain. Therefore, Healthcare Practices and Providers can take care of other activities while MGSI takes care of medical claims billing functions. For more details, log on to



About the Author

Joined: July 6th, 2012
Articles Posted: 76

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