In addition to a bonuses-only option for networks that meet quality and cost-control targets, known under the Patient Protection and Affordable Care Act as "shared savings," Medicare should create "two-sided" risk, one that offers a bonus for achieving cost and quality goals, but also leaves providers on the hook if costs exceed targets, according to the letter.
And by adjusting incentives, Medicare may also be able to minimize payouts for what could be random yearly changes in medical spending or potentially high losses for accountable care groups, according to MedPAC, which advises Congress on Medicare issues.
To encourage ACOs to take on the risk, Medicare could offer to share more of any savings to those that take the riskier option than to those that agree simply to receive bonuses.
Eventually, the majority of, if not all, accountable care networks should share financial risk for costs that exceed targets, the letter states.
The CMS recently said it would accept comments through Dec. 3 on regulations under development for the accountable care payment model, which Medicare may adopt beginning in 2012.
Medicare may also consider adjusting spending growth targets based on hospitals' or doctors' historic levels of service to avoid penalties for providers with already low use, according to MedPAC.
Seniors enrolled in Medicare should be informed that providers "are operating under a new incentive structure," and failure to do so risks backlash, as was the case with managed care, according to the advisory organization.
To ease concerns that providers will gain at patients' expense, Medicare could consider offering seniors enrolled in ACOs a cut of bonuses or reduced out-of-pocket costs.