By the restructuring of the Medicare Shared Savings Program, there can be a reduction of 40% in the health care costs

In 2018, the number of dollars spent on the healthcare in the U.S. has surpassed trillion dollars, with Medicaid and Medicare accounting nearly 37 percent of those expenditures. It is expected that the costs of healthcare will continue to rise by nearly 5 percent every year. There is still a debate going on in the healthcare policy for how to bring reductions in the costs without having to compromise on the quality.

The Medicare Shared Savings Program was created as a part of this effort for controlling the rising spending in Medicare by providing the healthcare providers with incentives to deliver better and efficient healthcare services.

The research was published in the INFORMS journal Operations Research. It offers a whole new approach which could change the paradigm of healthcare spending substantially by employing performance-based incentives for driving down the spending.

Zuo-Jun and Anil Aswani, the researchers from the the University of California, Berkeley, as well as, Auyon Siddiq of the University of California, found out that by the redesigning of the contract for the shared savings program for better aligning performance-based subsidies with provider incentives, there can an increase in both the Medicare savings, as well as, increase reimbursement payments of the providers.

Aswani who is a professor in the Industrial Engineering and Operations Research Department at UC Berkeley stated that by the introduction of the performance-based subsidies the Medicare savings can be boosted by up to 40 percent without compromising the participants of the healthcare provider in the shared savings program. With the help of this contract, there will be a tremendous improvement in the outcome for both the Medicare, as well as, the participating providers.